S&P shifts ASP NAPA view to negative

S&P said it revised its outlook for ASP NAPA Intermediate Holdings LLC to negative from stable and affirmed its B issuer rating. The B issue and 3 recovery ratings on its first-lien term loan are unchanged.

“ASP NAPA Intermediate Holdings LLC underperformed our expectations during the first nine months of 2022 due to sharply higher clinician compensation rates, soft volume at its client sites, and integration challenges and client losses from its American Anesthesiology acquisition that resulted in sizable free operating cash flow (FOCF) deficits. We see these operational challenges continuing into the first half of 2023 before we expect meaningful improvement,” S&P said in a press release.

The agency said it forecasts the firm’s adjusted debt to EBITDA leverage of about 11.5x in 2022 due to the expected decline in EBITDA from lower volume and higher costs. “However, we anticipate adjusted EBITDA to improve about 50% in 2023 on increased client subsidies and moderating costs resulting in adjusted debt to EBITDA of 7.4x in 2023.”

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