S&P lowers FHC Health Systems

S&P said it lowered its long-term issuer credit rating on FHC Health Systems Inc. (Beacon Health Options) to B- from B.

The outlook is stable.

The agency also lowered the debt ratings on FHC's first-lien revolver and term loan to B- from B. The recovery ratings are 3, which reflects an expectation for a meaningful recovery of principal (50%) in the event of a payment default.

“The downgrade reflects a view that FHC's business is not stabilizing as expected, resulting in revenue that will likely decrease for the second consecutive year in 2018 (down 5%-10%) and adjusted EBITDA that will be flat to slightly down in 2018,” S&P said in a news release.

“In recent years, FHC has faced business pressures such as contract terminations, membership declines, inadequate rates in certain contracts, and weaker-than-expected growth in risk-based contracts.”

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