S&P turns Scion Health view to negative

S&P said it changed its outlook for ScionHealth (Knight Health Holdings LLC) to negative from stable and affirmed its ratings, including its B- issuer rating.

“Knight's performance is trending in the right direction. After underperforming for the past two years, the company seems to have turned the corner. Most notably, contract labor expenses have significantly declined and patient volumes are improving, albeit relatively slowly for the specialty hospital segment. Furthermore, transaction costs and non-recurring uses of cash associated with the acquisition of Cornerstone Healthcare Group (completed in the first quarter of 2023) have now abated,” S&P said in a press release.

However, in explaining the negative outlook, the agency noted ScionHealth’s slower-than-forecasted operating improvement and the position that if it takes longer for cash flow to turn positive, liquidity could tighten and put into question the long-term sustainability of the capital structure.

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