Sound Inpatient Physicians Inc. is reportedly nearing a $1 billion debt refinancing agreement with existing creditors, including Monarch Alternative Capital and PGIM, as the healthcare services company seeks to strengthen its financial position and extend its debt maturities.
According to Bloomberg, citing people familiar with the negotiations, the refinancing transaction is expected to close next week. The proposed agreement follows the company's unsuccessful attempt to secure sufficient investor interest in the syndicated loan market earlier this year.
Sound Inpatient Physicians initially pursued a broader debt refinancing in June, with Barclays Plc leading the financing effort. However, weak investor demand prevented the transaction from moving forward, prompting the company to explore alternative funding arrangements with its existing lenders.
Barclays had previously been expected to relaunch the syndicated loan after adjusting its financing terms. Instead, Sound Inpatient Physicians shifted toward a privately negotiated refinancing agreement involving creditors already familiar with its financial operations.
Under the proposed $1 billion refinancing deal, the company would extend its debt maturity by five years. The new financing would carry an interest rate of six percentage points above the applicable benchmark rate, according to people familiar with the terms.
The proceeds will be used to refinance outstanding obligations following a major debt restructuring completed in 2024.
That earlier restructuring involved PGIM, Monarch Alternative Capital, and other lenders providing more than $100 million in fresh financing while reducing the company's existing debt burden by approximately $200 million.
During the 2024 transaction, Monarch purchased Sound Inpatient Physicians' debt, while PGIM increased its exposure by acquiring additional debt at distressed prices.
Since completing the restructuring, the company's financial performance has reportedly improved significantly. Earnings before interest, taxes, depreciation, and amortization (EBITDA) have more than doubled to exceed $250 million, according to Bloomberg's sources.
The stronger earnings performance could support the company's ability to manage its debt obligations and meet future financing commitments.
Extending debt maturities by five years would also reduce near-term refinancing pressure, giving Sound Inpatient Physicians additional time to maintain its financial recovery. However, the proposed interest rate means borrowing costs will remain an important consideration.
The anticipated agreement highlights how private credit lenders are increasingly providing refinancing solutions when traditional syndicated loan markets struggle to attract sufficient investor demand.
