Symplr Software: Added As An Important Underperformer in IQ 2026

June 28, 2026

Downgraded From CCR 3 To CCR 4. Added As A Major Underperformer

Symplr Software is inescapably an SaaS company at a time when that's a cause for concern. Yet its core business serving hospitals is very sound and, as far as we can tell, not being disrupted by AI yet. (9 out of 10 U.S. hospitals are tied into their software!).

A large group of BDCs has been lending to the BDC since 2019, and all was well till recently. Then, in the IVQ 2025, the company was added to our Watch List with a rating of 3 on our 5-point scale. In this most recent quarter, an even lower valuation has triggered a downgrade to a rating of 4. Given the huge amounts advanced - $517mn at cost and $373mn at FMV - this has been classified as a Major Underperformer, i.e., one whose FMV exceeds $100mn.

Why this degradation in value? This seems to be a classic case of overleveraging a company due to a "buy-and-build" strategy employed by the PE group in charge, Clearlake Capital Group. At last count, total debt-to-EBITDA was 12x-14x according to S&P Global. The company's debt service obligations have been growing faster than its EBITDA.

Furthermore, sending a shiver down the spines of its lenders, owner, and rating agencies is the upcoming 2027 maturity of $1.5bn in first-lien loans. Second lien debt follows in 2028. No wonder S&P rates the company CCC+ with a "Negative Outlook".

The outlook for Clearlake and any junior capital seems grim. Valuations of even very profitable SaaS companies have come down. Apparently, buyers used to pay 15x-18x REVENUES for the right businesses. Now the multiples have dropped by as much as two-thirds. You do the math for Symplr.

Nor is there any reprieve on the debt service front, as SOFR remains elevated and could rise further. Then there's a huge chunk of preferred stock on the balance sheet that's paid in kind (PIK). (Some of the second lien debt pays in PIK as well).

This and the upcoming debt maturity are the recipe for a credit disaster.

For the BDCs involved, their first-lien loans might hold up, but the second-lien and preferred seem at risk of being wiped out in a worst-case scenario. Here's the bad news: more than three-quarters of BDC exposure is in the junior capital. As a result, we are projecting a loss range of 75%-100%.

Most in the line of fire is Ares Capital (ARCC), which has invested an eye-popping $412mn, $360mn of which is in the form of second-lien debt and preferred equity. In the IQ 2026, Symplr had the second-largest unrealized write-down at the BDC, but that could get much worse.

Golub Capital BDC (GBDC) and New Mountain Finance (NMFC) have smaller outstandings, but all are in preferred and equity. The latter has invested in Symplr on both its own balance sheet and in its JV. Sixth Street Specialty (TSLX) is less at risk because its advances are in first lien loans, and PennantPark Floating Rate (PFLT) and BCP Lending Partners (BCIC) have modest exposures.

All interest is currently treated as current. However, if all the debt and preferred were to become non-performing, over $70mn in annual income would be forgone.

For those worried about a SaaS-pocalypse, Symplr - for reasons having nothing to do with AI - could be one of the first victims, and the impact could be material for the BDCs involved - especially ARCC. The BDC's strategy of often lending into the lower reaches of borrowers' balance sheet - which served so well during good times - may turn out to be its Achilles Heel in instances like this one.