S&P trims ATI Physical Therapy

S&P said it downgraded the ratings for ATI Physical Therapy Inc. and its first-lien debt issued by subsidiary ATI Holdings Inc. to B- from B. The recovery rating remains 3.

“The downgrade reflects our expectation for cash flow deficits in 2021, elevated leverage and uncertainty regarding the duration of staffing challenges. ATI experienced a spike in attrition of physical therapists toward the end of the second quarter of 2021. The attrition is attributed to a combination of factors, including cost-cutting actions taken by the company in 2020 in response to the pandemic, as well as a broader macroeconomic environment in which labor shortages and labor-cost inflation have increased,” S&P said in a press release.

However, the agency said it views ATI’s labor difficulties as being tied more to company-specific actions as opposed to macro factors.

The outlook is negative.

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