S&P boosts Quincy Health

S&P said it completed its review of Quincy Health LLC and raised its term loan and issuer ratings to CCC- from D and SD, respectively. The 4 recovery rating reflects average (30%-50%; rounded estimate: 45%) recovery for the lenders if Quincy defaults.

The outlook is negative.

“We believe Quincy will likely violate a covenant on its term loan within the next six months absent near-term asset sales or an amendment to its credit agreement. The maximum secured net leverage ratio covenant on the term loan steps down to 7x from 7.5x in January 2024 and to 5x in April 2024. Additionally, the company's credit agreement provides specific timelines in the first half of 2024 to sell various assets. With our expectations of continued weak operating performance and uncertainty regarding the ability to complete asset sales within specified timelines, we believe a covenant will likely be breached, absent an amendment,” S&P said in a statement.

The agency said it forecasts Quincy’s S&P Global Ratings-adjusted debt to EBITDA to top 15x in 2023 and above 10x in 2024, even with potential debt repayment.

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