S&P prunes ADMI

S&P said it lowered its ratings for ADMI Corp. (Aspen Group) a notch, including the rating on its $1.2 billion floating-rate term loan to B- from B.

“We believe ADMI's leverage will likely remain elevated, at more than 8x over the next year, with limited FOCF. ADMI's S&P Global Ratings-adjusted leverage increased to 9.4x in 2022 due to weak results in its urgent care business (WellNow) and higher operating expense primarily due to increased labor costs. While we believe ADMI should be able to offset some of the impact from macroeconomic pressures through pricing actions and cost-cutting initiatives, its margins are likely to remain depressed over the next year.

“For 2023, we forecast total revenue will increase 3%-5% while EBITDA falls in the 5%-7% range as solid organic growth in its dental business (Aspen Dental), de novo contributions, and the full-year benefit of mergers and acquisitions (M&A) closed in 2022 is offset by its currently unprofitable urgent care operations and the fallout from the cyber incident that occurred in April of this year. As such, we expect leverage will increase to the low- to mid-10x area in 2023, before declining to the 8x-9x range in 2024 on improved margins,” S&P said in a press release.

The outlook is stable.

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