Moody's alters Gainwell view to negative

Moody's Investors Service said it changed the outlook to negative from stable and affirmed Gainwell Holding Corp.'s B3 corporate family rating and B3-PD probability of default rating. Moody's also affirmed Gainwell Acquisition Corp.'s backed senior secured first-lien credit facilities at B2 and assigned a negative outlook.

“The affirmation of the ratings and the outlook change to negative reflect the increased uncertainty around Gainwell's ability to generate free cash flow in 2024. Profitability remains constrained by high interest rates and larger than-anticipated operational costs.

“The company expects to boost profit margins through an ambitious turnaround plan, including standardization across state programs, enhanced automation, workforce redesign and other cost-cutting efforts. The company expects to complete these initiatives by fiscal year 2025, but Moody's believes the timeline and net benefit of these initiatives remain uncertain, which could result in ongoing cash flow deficits and further weakening of already strained liquidity dependent upon the $400 million revolver expiring in 2025. “The unwinding of the Medicaid Continuous Enrollment Provision legislation, which was temporarily put in place in response to the Covid pandemic and ended in March 2023, could also reduce Medicaid enrollment levels and pressure revenue growth,” the agency said in a press release.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.