Aspen Group Seeks New Investors Amid Debt Concerns and Weak Earnings

Based on a recent announcement, Blackstone and KKR are set to take control of struggling US DSO giant Affordable Care after agreeing a restructuring deal that will reduce the company’s debt burden by roughly 70%. insightsZ covered this subject in greater detail in our recent article here. In the current article, we explore the possibility of the country’s second largest DSO (by number of offices operated) Aspen Dental undergoing debt restructuring in FY 2027.

Rising Interest Rates & Margin Squeeze

The Aspen Group (TAG), one of the largest consumer healthcare portfolios in the U.S., reported $4.2 billion in annualized net revenue during FY2025. Based on a recent Bloomberg article, TAG is exploring tapping outside investors to tackle the maturities of roughly $3 billion of loans due next year amid weaker earnings.

Public reporting indicates that TAG's owners received roughly $1.1 billion of debt-funded dividends between FY2012-2021, including an $835 million dividend recapitalization in FY2021. Those dividends were largely financed with new borrowing rather than excess cash generated by the business – adding extra burden to the company’s leveraged finance structure.

Following this lead, insightsZ conducted a deeper investigation and found that although TAG’s revenue has increased in recent years, the company’s interest and debt payments have risen even faster. In other words, the conglomerate that operates one of the country’s largest DSOs is demonstrating a classic negative spread (ROC<g) as higher borrowing costs are squeezing margins and widening the rate-growth differential- depleting FCF and exposing the highly leveraged debt structure of the conglomerate.

A person familiar with the matter reported that TAG is in talks to sell-off its urgent care BU WellNow™ for approx. $300 M. insightsZ expects that, while this transaction may help reduce the overall principal balance, the reduction would amount to only about 10% of the company's estimated total debt burden of approx. $3 billion.

Recent Highlights:

• Although TAG reported strong top-line growth in FY2025 (especially during Q1-Q3 2025), this was primarily driven by changes in revenue recognition policies rather than underlying business performance alone. Revenue declined in subsequent quarters, suggesting that the FY2025 growth was not sustained.

  
  

• Q1 2026 TAG’s EBITDA declined by 6% versus previous year. To make matters worse, the adjusted earnings drop in Q4’25 is estimated to be approximately 23% on YoY basis.

  
  

• FY2024 TAG performed in-line with expectations - achieving 14.4% revenue growth and adjusted EBITDA margins of about 11.8% (excluding the impact of a bad-debt reserve taken in Q4’24).

  
  

• TAG’s portfolio ClearChoice™ brand continues to perform well below expectations in recent quarters, coupled with significant working capital outflow and poor commercial performance – predominantly caused by macro head winds. Due to higher price-point and service portfolio, ClearChoice™ is more vulnerable to the business cycles and other affordable alternatives.

  
  

• In contrast, TAG’s urgent-care clinics WellNow™ continue to experience tailwinds in FY2025 and H1’26 – driven by higher reimbursement rates as well increased in-network coverage with Excellus (its largest payor in the urgent care space). Based on a recent Bloomberg article, TAG is expecting to spin-off its urgent care division and the transaction is expected to garner a sale price of approx. USD 300 million.

  
  

insightsZ continues to monitor the ongoing developments and plans to share its findings in the upcoming version of this report.

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