OREANDA-NEWS. S&P Global Ratings today assigned its 'BB-' issue-level rating (one notch above the corporate credit rating) to U. S.-based pharmacy benefit manager MedImpact Holdings Inc.'s proposed $400 million first-lien term loan A due 2021, which is being issued by subsidiary MI OpCo Holdings Inc. While MedImpact Holdings does not guarantee this debt, we consider MI OpCo as a core subsidiary of MedImpact Holdings Inc., given that that its business lines are integral and closely linked to MedImpact Holdings Inc.'s overall strategy and identity. We assigned this debt our '2' recovery rating, indicating our expectation for substantial (70%-90%, at the lower end of the range) recovery in a default.

The new term loan is rated the same as the company's existing $350 million term loan B facility, which it refinances.

Our corporate credit rating on MedImpact is 'B+' with a positive outlook.

We assess MedImpact's business risk profile as weak, characterized by the company's limited market share (approximately 5%) in the highly competitive pharmacy benefit management (PBM) market. Although only a handful of sizable competitors remain in the PBM marketplace following recent consolidation, MedImpact is dwarfed in scale by Express and CVS/Caremark, which together hold more than 60% of the market.

Our assessment of the financial risk profile as significant primarily reflects our expectation that the company will maintain leverage in the mid-2x area and improve FFO (funds from operations) to debt into the high-20% area by the end of 2016.