S&P turns athenahealth view to negative

S&P said it revised the outlook for athenahealth Group Inc. to negative from stable and affirmed the B- issuer rating.

“The outlook revision reflects uncertainty stemming from the company's ability to meaningfully increase revenue through market share gains and implement cost savings to improve EBITDA margins to grow into its capital structure. Our base case currently has the company's revenue growing organically at a mid-single-digit percent rate and adjusted EBITDA margins expanding due to cost-cutting measures,” S&P said in a press release.

Even so, the agency said it forecasts adjusted leverage staying in the double-digit area, roughly 15x for 2023 and 13x for 2024 when burdening debt with the preferred equity and EBITDA with capitalized software costs, 11x and 9.6x respectively without the preferred equity.

S&P said it also expects free cash flow to be negative in 2023 “before turning modestly positive in 2024.”

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