S&P moves Virgin Pulse view to negative

S&P said it revised its outlook for Virgin Pulse (Red IntermediateCo LLC) to negative from stable and affirmed the B- issuer rating.

“Recent profitability deterioration may hinder the company's performance in a challenging macroeconomic environment. The first half of 2022 has seen many of the company's key credit metrics compromised by continued business investments. During this period, operating expenses far outpaced revenue growth and the company saw weakness in both S&P Global Ratings-adjusted EBITDA margins and FOCF, which fell to 3% from 18%, and to negative $2 million from $27 million respectively,” the agency said in a press release.

The weaker outlook reflects the view that a highly likely recession coupled with climbing interest rates will worsen Virgin Pulse’s already eroded free cash flow and EBITDA margins, S&P said.

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