Research Update: Quincy Health LLC Rating Revised To 'CCC-' From 'SD' After Debt Modification Transaction; Outlook Developing

Quincy Health LLC, operator of about 10 rural hospitals, completed a debt amendment in July 2024 that allowed interest payments beyond 30 days, and a subsequent amendment in October that enables the company to extend the April 2025 maturity on its $700 million term loan, by more than two years if it meets certain conditions in January 2025. The company also issued two delayed-draw term loans totaling $70 million and took ownership of two hospitals from the Steward bankruptcy. Given the potential for significant debt maturities in six months, if the company fails to satisfy the conditions, we believe there is significant risk of a near-term payment default or amendment that we may view as a distressed exchange. We revised

...- Quincy Health LLC, operator of about 10 rural hospitals, completed a debt amendment in July 2024 that allowed interest payments beyond 30 days, and a subsequent amendment in October that enables the company to extend the April 2025 maturity on its $700 million term loan, by more than two years if it meets certain conditions in January 2025. - The company also issued two delayed-draw term loans totaling $70 million and took ownership of two hospitals from the Steward bankruptcy. - Given the potential for significant debt maturities in six months, if the company fails to satisfy the conditions, we believe there is significant risk of a near-term payment default or amendment that we may view as a distressed exchange. - We revised our issuer credit rating on Quincy to '###-' from '##' (selective default). The outlook is developing. - We also revised our issue-level rating on the company's term loan to '###-' from 'D'. Our recovery rating remains '4' (from our last estimate) and reflects our...

Research Update