Research Update: Quincy Health Rating Lowered To 'CCC' On Wider Negative Cash Flow, Weak Liquidity, And Potential Covenant Breach

Quincy's operating performance in the first half of 2022 was well below our expectation, resulting in wider-than-expected cash flow deficits and weak liquidity. Based on our projections we believe Quincy will likely violate its term loan agreement covenant in the third quarter of 2022 unless it obtains an amendment from lenders. We lowered our issuer credit rating on Quincy Health LLC to 'CCC' from 'B-' and our issue-level rating on its secured term loan to 'CCC' from 'B-'. The '3' recovery rating indicates our expectation for meaningful (50%-70%; rounded estimate: 50%, down from 55%) recovery in the event of a payment default. Our negative outlook is based on our view of continued weak operating performance and cash flow deficits, along

...- Quincy's operating performance in the first half of 2022 was well below our expectation, resulting in wider-than-expected cash flow deficits and weak liquidity. - Based on our projections we believe Quincy will likely violate its term loan agreement covenant in the third quarter of 2022 unless it obtains an amendment from lenders. - We lowered our issuer credit rating on Quincy Health LLC to '###' from 'B-' and our issue-level rating on its secured term loan to '###' from 'B-'. The '3' recovery rating indicates our expectation for meaningful (50%-70%; rounded estimate: 50%, down from 55%) recovery in the event of a payment default. - Our negative outlook is based on our view of continued weak operating performance and cash flow deficits, along with the company's weak liquidity position, increased possibility of a distressed exchange, and potential term loan covenant violation, which could result in a default....

Research Update