Moody's lowers Athletico

Moody's Investors Service said it downgraded Athletico Holdings, LLC's ratings, including the corporate family rating to B3 from B2, the probability of default rating to B3-PD from B2-PD and the senior secured first-lien facilities ratings, at the subsidiary level, to B3 from B2. The outlook was revised to negative from stable.

The downgrade was indicated by an erosion in operating performance following the acquisition of Pivot Health Solutions in February due to ongoing industry-wide labor shortages and a continued debt-funded growth strategy, the agency said. The Pivot acquisition pushed financial leverage up by about 1.5x on a Moody's adjusted basis to approximately 8x.

Moody's said it estimates leverage will stay elevated and above 6x over the next 12-18 months.

“Additionally, Athletico's liquidity has weakened as the company drew on its revolver to fund recent acquisitions, de novo growth, and other corporate purposes. Moody's expects pressure on cashflows to persist with only modest positive free cash flow in 2023,” the agency said in a press release.

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