Moody’s slices ScionHealth ratings

Moody’s Investors Service said it downgraded ScionHealth's (Knight Health Holdings LLC) corporate family rating to Caa2 from B3, probability of default rating to Caa2-PD from B3-PD and senior secured term loan to Caa2 from B3. The agency also changed the outlook to stable from negative.

“The ratings downgrade reflects Moody's view that ScionHealth's weak liquidity will contribute to making the capital structure increasingly unsustainable and the probability of a default, by way of a distressed exchange, is high,” the agency said in a press release.

“Moody's said it forecasts ScionHealth's leverage will probably remain elevated for an extended period. It calculates ScionHealth's debt to EBITDA to be roughly 7.3x LTM Sept. 30, 2023, down from 7.9x at FYE 22. “Moody's anticipates that operating expenses will continue to pressure profitability and liquidity in the near term, driven by higher interest rate expense and elevated labor cost, although labor cost fundamentals continue to improve. This will pose challenges to the company's pace of deleveraging as well as cashflow generation, and will make ScionHealth more weakly positioned to absorb future operating setbacks, with limited availability under its ABL facility,” the agency said.

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