S&P views Radiology Partners negatively

S&P said it revised its outlook for Radiology Partners Holdings LLC to negative from stable and affirmed the B- ratings on the issuer and its secured first-lien debt and CCC rating on its unsecured debt. The 3 recovery rating (recovery prospects: 50%-70%; rounded estimate: 55%) on the first-lien debt and 6 recovery rating (recovery prospects: 0%-10%; rounded estimate: 0%) are unchanged.

“Our negative outlook reflects the rising cost pressures on EBITDA and our expectation that liquidity will be constrained. We expect rising wage costs because of the tight labor market will pressure EBITDA margins for 2022 and possibly into 2023. The total cost of operations for the first half of 2022 was about 95% of revenue, 2% higher compared with the first half of 2021. We project adjusted EBITDA margins will decline about 150 basis points (bps) in 2022, from 12.9% in 2021,” the agency said in a press release.

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