Interest expense will rise 20% for most low-rated healthcare companies in 2023 and the metrics would further weaken if rates continue to rise, according to a new report by Moody’s Investors Service.
Moody’s released the report prior to the Federal Reserve raising the interest rate by a quarter point yesterday. The report covers the time frame beginning in 2022, through the last increase in February 2023, Healthcare Finance reports.
The report looked at 47 healthcare companies in the United States and Canada rated B2 or lower with at least $1 billion of outstanding debt.
Interest expense and cash flows will meaningfully weaken for most low-rated healthcare companies throughout 2023, Moody’s said.
“We believe that interest rate hikes that have already occurred will have a larger impact on the 47 companies in our sample …” Moody’s said. “The effects of prior rate increases will be felt with each sequential quarter of earnings throughout 2023. Still, any future rate hikes would also have an impact.” Read more.
