Moody's downgrades Midwest Physician

Moody's Investors Service said it downgraded Midwest Physician Administration Services, LLC's corporate family rating to B3 from B2, probability of default rating to B3-PD from B2-PD and the senior secured first-lien credit facilities to B3 from B2. Midwest is a core operating company of DMG Practice Management Solutions LLC or Duly.

“The downgrade of Duly's ratings reflects Moody's expectation of elevated financial leverage through 2024 over 6x. The company's adjusted debt/EBITDA per Moody's calculations rose to approximately 8.3x at the end of March 31, 2023. The primary drivers for the spike in financial leverage were a surge in operating expenses including higher medical claims costs associated with the capitated plans and elevated labor costs,” the agency said in a press release.

On the positive side, Moody’s said it expects Duly to break even in 2024 as its collections normalize.

The outlook is stable.

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