S&P revises Schumacher view to negative

S&P said it changed its outlook for Schumacher Group of Delaware Inc. (SCP) to negative from stable and affirmed its B ratings on the company and the ratings on its revolver and first-lien debt.

“Our negative outlook reflects rising cost pressures and our expectation of free cash flow deficit in 2023. We expect SCP's EBITDA margin for 2023 will experience pressure partly from higher clinical compensation costs, offset by a year-over-year reduction in fee-for-service contracts,” S&P said in a press release.

The agency noted that about 30% of SCP’s “patient service revenue is out of network, exposing it to greater risk from the arbitration process under the No Surprises Act (NSA), which may delay cash collections.”

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