Latest Update: IIQ 2026 Update
Therapy Brands Holdings, LLC (operating as Ensora Health) is a specialized practice management and health information technology software provider focused on the behavioral, mental, and rehabilitative health sectors. The company delivers fully integrated, multi-tenant software-as-a-service (SaaS) platforms and practice solutions designed for mental health practices, Applied Behavior Analysis (ABA) clinics, substance use recovery centers, and physical/occupational/speech therapy (PT/OT/SLP) facilities.
September 29, 2026
Remains Rated CCR 4 And An Important Underperformer
We've been debating whether or not Therapy Brands should be listed as an Important Underperformer. Here's our dilemma. There are 6 BDCs with exposure to the SaaS company, but only one - Ares Capital (ARCC) - values its debt at less than 80% of cost. The ARCC position is a second lien loan and is discounted 23%. All the other BDCs value their loans to the company at much more modest discounts. Admittedly, all but one of the loans involved is in a first lien position. However, even a second lien loan identical to ARCC's held by a non-traded BDC is valued at par.
There's more. The recent valuations by all the BDCs except for ARCC are a recent development. Through much of 2024 and all of 2025 most of the loans were substantially discounted by their lenders, as much as 37%. That suggested the BDCs had serious concerns about the company which have only recently dissipated.
Given that history and the fact that the company is squarely an SaaS enterprise, with debt coming due in 2028 and 2029, we decided to flag the potential risk that might lie ahead regardless. The debt comes due in 2028 for the first lien and in 2029 for the second lien. Cause for concern is that the company was acquired by KKR Inc. in 2021 at the height of the market for SaaS enterprises. The buyer reportedly paid $1.25bn, or 25x EBITDA and 10x revenue. It's hard to believe the company would attract such valuations today.
If anyone is keeping a tickler file for SaaS companies that might have trouble refinancing down the line - in this case that might be as early as 2027 to get ahead of the May 2028 maturity - Therapy Brands might need to be included. We're not alone in being concerned. Apparently, S&P Global Ratings downgraded Therapy Brands in April 2026 to 'CCC-' with a Negative Outlook due to an ongoing cash burn, high floating interest expense, and tight liquidity around its maturing credit facility. That first lien debt, which the BDCs have been marking more favorably, has been given a CCC- rating by S&P. The second lien debt gets a C rating and a 0% recovery expectation. S&P noted "elevated restructuring or distressed exchange risk absent a new equity check or covenant relief from KKR".
Given all the above, we opted to include Therapy Brands as an Important Underperformer. For the moment, we are assuming an ultimate loss of only 25%-50%.
OUR VIEW
Some BDCs have been criticized of late for offering quarterly valuations that do not appear to fully reflect the real risk of loss involved. The criticism swells when loans suddenly drop sharply in value, sometimes to nothing as in the recent case of
Loparex,
Zips Car Wash and
HomeRenew. This is a serious challenge to the credibility of BDCs - both public and private - which periodically provide these valuations. If the given values of loans cannot be trusted then the actual net book value of the BDCs involved is placed into question as well as the solidity of future earnings. We've tried to explain that the problem is not necessarily that BDCs are deliberately misleading the markets in some sort of massive conspiracy, as some have suggested. The critics do not always understand that a BDC loan valuation is a snapshot at a given moment and is subject to a series of quantitative calculations that seeks to avoid any subjective conclusion by the issuer. The given value, though, is evanescent, subject to change with every new subsequent development, both at the company level and in the macro environment. At best, a loan valuation once published - typically weeks after its calculation - is a rough approximation. At worst, relying on it is like trying to catch a train using last week's timetable. Unlike a bank, a BDC does not book a reserve to reflect the expected final likely outcome. Not to get technical, but it's the difference between accounting treatment ASC 820 (BDC) and ASC 326 (Bank). With that said, we are nonetheless surprised that so many BDCs valued their loans to Therapy Brands so "generously" as of the IIQ 2026. The lower multiples for software companies are well known and would be included in BDC valuation models and we would expected them to depress values. However, it's possible there are other factors at play including information that may not be publicly available about - say - support from the sponsor, or some other factor. Much as they might like to, the BDCs cannot offer full transparency about how every investment is valued every 3 months. This leaves many in the market doubting what they are told and the BDCs able to respond only with broad platitudes. It's a shame. We have tried to get around this conumdrum by offering our estimate of the likely loss that will occur which you can find in the Company File on every Important Underperformer. Most of the time, our estimates have turned out to be pretty accurate but there's no denying that much guesswork is involved and as William Goldman famously said about Hollywood and their ability to tell if a movie was destined to be a hit: "Nobody knows anything...Every time out it's a guess and, if you're lucky, an educated one". We still believe our educated guesses, though, are better than the ever changing quarterly valuations of the BDCs themselves.
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