Major specialist corporate facing financial stress

One of Australia’s largest private specialist care providers is reportedly facing serious financial problems, with ratings agency S&P Global downgrading its credit rating on “heightened default risk”.

GenesisCare operates 40 cancer centres around the country and is also a major player in cardiology and sleep and respiratory medicine, as well as being one of the largest providers of oncology treatment in the US, Spain and the UK.

But it has been making headlines in the financial press in recent months, amid concern about its capacity to pay down almost $1.7 billion in debts.

On Thursday, S&P Global announced it was reducing the corporate’s rating to “CCC-“ from “CCC” – considered “vulnerable” with “weak liquidity”.

It said the assessment was based on a forecast of depleting cash balances, shareholder loans due in 2023, high capital spending and weakened earnings.

As a result, GenesisCare’s capital structure had become unsustainable, the agency said.

“We believe the Australia-based cancer-care service provider may undertake a distressed exchange or other form of debt restructuring that we would consider a default over the next six months,” S&P Global said.

It comes after the company sold its Australian cardiology network last year in a deal reportedly worth up to $250 million.

The business, now known as CardioCo, describes itself as Australia’s only national provider of cardiology and sleep services with a network of more than 100 private practices.

These employ over cardiologists and respiratory physicians, and greater than 700 technicians and support staff, treating around 200,000 patients annually.

At the time, GenesisCare CEO Dan Collins argued the move would allow the business to focus on improving its oncology service.

“Our cardiology team is the best in Australia and has a long track record of achieving world-class clinical outcomes for patients,” he said.

“I am grateful for their exceptional clinical standards and continuous efforts to improve patient access and foster innovation.

He added: “This divestment is the natural next step for both CardioCo and GenesisCare. It will fuel CardioCo’s next phase of growth and continue the exceptional progress in clinical trials, government partnerships, and pioneering novel therapies.”

“For GenesisCare, we can focus our efforts solely on our integrated oncology program and sharing our best practice and innovation developments across all markets.”


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