Announcement: Moody's assigns SGL-1 liquidity rating to Signify Health after IPOGlobal Credit Research - 19 Apr 2021New York, April 19, 2021 -- Moody's Investors Service ("Moody's") assigned a speculative-grade liquidity rating of SGL-1 to Signify Health, LLC, reflecting the health risk assessment ("HRA") provider's very good liquidity after its February 2021 IPO. Signify's credit ratings, including the B2 corporate family rating ("CFR"), B2-PD probability of default rating ("PDR"), and B2 instrument ratings on its first-lien debt, are not affected by this action. The outlook remains stable.RATINGS RATIONALEIn its February 2021 IPO, Signify raised net cash proceeds of $610 million, giving the company a negative net funded debt position, and prompting the assignment, now that Signify is a public company, of the SGL-1 liquidity rating. The company has an exceptionally strong cash position relative to its approximately $410 million of funded debt -- Moody's estimates first-quarter 2021 cash of about $680 million -- and full availability under its $80 million revolving credit facility. However, Signify has disclosed little in terms of its expected use of IPO proceeds, indicating that M&A activity could be part of its plans. Even after the IPO, private equity sponsor New Mountain Capital continues to have a majority, 62% ownership position in the company, implying that the risk of aggressive financial strategy remains significant. Given that Signify's ownership structure has changed, Moody's views ESG -- Governance as a key driver of this public liquidity-score assignment.Moody's could upgrade the ratings if free cash flow as a percentage of debt holds above 5.0%; if the company maintains good revenue growth while diversifying revenue sources across business lines and away from CMS-associated (Centers for Medicaid and Medicare) sources, and; if Moody's expects it will adhere to a conservative financial policy.Moody's could downgrade the ratings if expected revenue growth fails to materialize; if Moody's adjusted debt-to-EBITDA leverage holds above 5.0 times; if we expect free cash flow to be negative for a sustained period; or if there is a legislatively imposed change to the scope of the HRA model.Signify Health, domiciled in both Dallas, TX and Norwalk, CT, is a leading provider of home-based care management services on behalf of Medicare Advantage health plans in the U.S., including health risk assessments ("HRAs") and chronic and post-acute-care management. The company was formed by the late-2017 acquisition by New Mountain Capital of both Censeo Health and Advance Health. In November 2019, New Mountain contributed to the Signify Health entity another of its portfolio companies, Connecticut-based Remedy Partners, a provider of software and analytics that facilitate large-scale bundled payment programs. The company undertook an IPO in February 2021. Moody's expects Signify to generate 2021 revenue of at least $700 million.The methodology used in this rating was Business and Consumer Service Industry published in October 2016 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1037985. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history. Kevin Stuebe Vice President - Senior Analyst Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Karen Nickerson Associate Managing Director Corporate Finance Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 © 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). 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