S&P rates ATI Physical Therapy B

S&P said it gave a B issuer rating to ATI Physical Therapy Inc., the new parent company of ATI Holdings Inc. ATI Physical Therapy was formed from the special purpose acquisition company deal announced on Feb. 22

The agency also raised the issuer credit rating on ATI Holdings Acquisition Inc. to B from B- and removed the ratings from CreditWatch, where they were placed with positive implications on Feb. 22.

S&P upgraded the first-lien debt, issued by wholly owned subsidiary ATI Holdings, to B and affirmed the recovery rating of 3.

“The upgrade reflects the significant debt reduction following the SPAC-merger transaction, as well as prospects for improving EBITDA and cash flow generation. . We expect the stronger balance sheet will support the company's ability to execute on its growth strategy. Upon close of the transaction, the company repaid its second-lien term loan in full, and a portion of its first-lien term loan, resulting in gross debt of $561 million upon close of the transaction,” S&P said in a press release.

The agency said it sees adjusted debt to EBITDA in the 6x to 7x range in 2021, and improving to below 5x in 2022 as the company sees patient visit volumes return to pre-pandemic levels by the end of 2021.

The outlook is stable.

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