Moody's downgraded Meinian Onehealth Healthcare Holdings Co. Ltd.'s corporate family credit rating to Ba3 from Ba2.
The rating agency also changed its outlook on the Shanghai-based healthcare services provider to negative from a so-called review for downgrade, signifying a further rating cut could take place in the future.
Moody's action reflects the agency's view that Meinian Onehealth's leverage — a measure of borrowed money to expand or run a business — will remain high over the next 12 to 18 months and will not be offset by an increase in revenues.
The rating agency expects Meinian Onehealth's revenue to grow between 15% to 18% over the next 12 to 18 months, lower than the 30% growth rate expected previously given a decline in the company's medical center utilization. The company had introduced a new appointment service system, which, while improving customer experience, limits the number of visits per medical center.
The lower growth trajectory, combined with larger-than-expected investments to improve service quality, as well as higher expenses related to training and compensation, is likely to lead to a lower-than-expected margin, said the rating agency.
Moody's expects Meinian Onehealth's adjusted debt to EBITDA ratio — the ability to pay down debt before certain items — to increase to a multiple of 4 to 4.5 over the next 12 to 18 months.
Moody's said it could change the outlook back to stable if Meinian Onehealth adequately improves its liquidity position over the next six to 12 months, among other things.