Alliance HealthCare Services Ratings Placed On CreditWatch Negative On Liquidity Concerns Due Spread Of The Coronavirus

  • We expect demand for discretionary imaging scans such as mammograms and some orthopedic-related scans to decline significantly amid the coronavirus pandemic, resulting in Alliance HealthCare Services losing a sizeable amount of revenue and EBITDA.
  • A decline in EBITDA could result in the company tripping its already tight covenants, which stepped down on Dec. 31, 2019.
  • We are placing all of our ratings on Alliance HealthCare, including our 'B-' issuer credit rating and our issue-level ratings, on CreditWatch with negative implications.
  • The CreditWatch placement reflects that we could lower our ratings on Alliance HealthCare and its debt if we believe the company cannot adequately address its financial covenants and liquidity concerns in the near term.
NEW YORK (S&P Global Ratings) March 25, 2020--S&P Global Ratings today took the rating actions listed above.
The CreditWatch placement reflects our view that the coronavirus pandemic could result in Alliance HealthCare Services losing a sizeable amount of revenue, EBITDA, and cash flow in 2020 compared to our prior base-case estimates, due to the rapid decline in demand for diagnostic imaging as patients forgo discretionary scans such as mammograms and certain orthopedic scans. Requests from several federal and state regulatory agencies for health care facilities to postpone nonessential procedures to conserve much-needed supplies and safety equipment will also hurt Alliance HealthCare's financial results. An increase in coronavirus-related respiratory scans could partially offset these declines, but that impact would likely be minimal.
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