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One less competitor for Nuance - MModal files bankruptcy - MModal employee

Posted: Mar 08, 2014

From this morning's Wall Street Journal: 

M*Modal, a medical services company owned by a J.P. Morgan Chase JPM +0.85% & Co. private-equity arm is preparing to file for bankruptcy protection in the next two weeks as it struggles under a hefty debt load and declining sales, people familiar with the matter said.

M*Modal is in discussions with its creditors on a prearranged restructuring plan that would streamline its trip through bankruptcy court, these people said. The bankruptcy negotiations come about 18 months after One Equity Partners took the company private through a leveraged buyout.

Some creditors, including Brigade Capital Management LLC, Blackstone GroupBX +0.96% LP's GSO Capital Partners and Fidelity Investments, are negotiating with the company to swap their debt for equity in the reorganized company, they added.

The discussions are ongoing, and the goal is to file by about mid-March, when a grace period for a February missed bond payment expires, two of the people said.

At the time of the missed payment, the company said it was engaged in discussions with some lenders and bondholders to reduce its debt. "We believe these discussions have been constructive," M*Modal Spokesman Joe McNamara said in a Feb. 19 statement.

M*Modal transcribes doctors' voice recordings and develops voice-recognition software for the medical industry. Some creditors hope the company's restructuring will put it in a position to grow the voice-recognition software part of the business, one of these people said.

One Equity tapped its latest buyout fund for the $447 million it put toward the $1.1 billion purchase, according to securities filings. As M*Modal's financial situation deteriorated last year, One Equity gave the Franklin, Tenn., company another $20 million, according to credit analysts. J.P. Morgan has said it is spinning off One Equity as an independent firm.

M*Modal has about $750 million in debt, according to securities filings and credit-ratings firms, close to three times what it carried before the August 2012 buyout.

Moody's Investors Service and Standard & Poor's Ratings Services each downgraded M*Modal deeper into junk territory this year as the company's results weakened.

The Wall Street Journal reported in January that the company and some of its creditors were working with restructuring advisers.

M*Modal was founded in 1998 and grew through acquisitions. Sales jumped tenfold between 2006 and 2009. In 2010 revenue was about $415 million and the company, then known as MedQuist Holdings Inc., sold stock the next year in an initial public offering at $8 a share. The company changed its name to M*Modal the following January, and it agreed to the buyout, at $14 a share, in July.

M*Modal's main business is transcribing doctors' voice recordings. One Equity believed that the introduction of new voice recognition technology would boost sales, people familiar with the matter have said.

The company's rollout of new technology hasn't yet brought much profit, though, and its regular line of business has come under pressure from abundant technologies that turn speech into text on the spot and adoption of electronic health records, credit analysts say.

Write to Emily Glazer at emily.glazer@wsj.com

M*Modal Bankruptcy - Nuance will probably buy it

[ In Reply To ..]
Like MM bought out Spheris when they filed for BR, Nuance will probably do the same with MM. Nuance is just another MM anyway. These BR are so bogus; the big wigs take the money and run and we are left with the garbage and yet another monster of a company to work for. I say bye-bye to both of them; let them burn!

MModal will restructure, under protection from lawyers - anon

[ In Reply To ..]

just some thoughts - sm

[ In Reply To ..]
A. It's a reorganization bankruptcy so they aren't dead (yet).

B. Nuance cannot afford to buy them (they're having their own financial issues)

C. Your life with MModal will likely continue as it has been for the forseeable future.

Nuance having financial issues? - Can you provide proof please?

[ In Reply To ..]

here you go - me

[ In Reply To ..]
This is the most recent one. http://dealbook.nytimes.com/2013/05/15/a-tech-m-a-machine-hits-the-brakes/?_php=true&_type=blogs&_r=0

they are not out of business by BK. - geez

[ In Reply To ..]
Simply restructuring debt and most likely trading stock shares in exchange for debt forgiveness. They will not be out of business..

It hasn't been determined which form of bankruptcy they've filed - anon

[ In Reply To ..]
There are 2 different types, chapter 7 and chapter 11. Chapter 7 would be the restructuring kind. Chapter 11 would be the end of the road for MModal. None of the articles so far have stated which type of bankruptcy filing this is and so far there has been no public statement made or comment issued by the company.

They haven't filed bankruptucy. - yet to be determined.

[ In Reply To ..]
It may be fun for you but for those of us who work for the Big M, nothing about this is cute or funny.

So far they have not filed bankruptcy and are in talks with creditors to avoid that.

They filed for Chapter 11 - nm

[ In Reply To ..]

There's no way Nuance would ever buy a company with that much debt - anon2

[ In Reply To ..]
It would be a *seriously* bad investment for Nuance or anyone else. They would have to assume some or part of MModal's bad debt and there's waaaay too much of it now.

The case can't even be made that Nuance would be interested in MModal's accounts because they're all going away too, either to other companies or to other, newer technologies.

Nuance is already leaps and bounds ahead of MModal for its speech recognition/SIRI technology. I can't imagine under the sun what benefit MModal would ever have for Nuance unless Nuance is interested in assuming a boatload of debt and inferior technology.

It'sAmazing - TechnoAdvantage

[ In Reply To ..]
Not to knock NTS (what's to knock, eh?)but they are a prime example of poor management with MTs tettering on the brink of poverty but they have technology (SR) that kicks butt. If they only had some smarts at the helm who knew something about the industry and equal pay for all, it would not be so bad. It will be interesting to see how this plays out.

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