S&P views Matrix Medical negatively

S&P said it revised its outlook for Matrix Medical Network (Mercury Parent LLC) to negative from stable and affirmed the B- ratings on the issuer and its first-lien secured debt. The 3 recovery rating is unchanged.

“In the first quarter of 2023, Matrix demonstrated a significant turnaround in its foundational in-home health and care assessment business, driven by stronger volume of visits and lower direct costs per visit. However, despite the first-quarter outperformance, we still expect the company to have negative to break-even free operating cash flows continuing into 2024 due to higher interest rates on its floating rate debt,” the agency said in a press release.

Furthermore, Matrix’s $20 million revolver matured in February and has not been replaced and the company's entire capital structure, consisting of around $312 million of term loans outstanding, matures in February 2025.

“We assume that even if Matrix refinances later this year, it will be burdened by an incremental $5 million to $10 million of interest expense in 2024 and beyond due to substantially higher prevailing margins,” S&P said.

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