Fitch Ratings maintained a positive outlook for Dallas-based Tenet Healthcare after the hospital operator announced plans to spin off its revenue cycle management subsidiary Conifer Health Solutions by the end of the second quarter of 2021.
The agency, which revised Tenet's outlook from stable to positive in September 2018, said the Conifer decision is "unlikely to influence the resolution of the positive outlook" and that Fitch "does not believe the loss of business diversification will be a headwind to [Tenet]'s credit profile in and of itself."
Tenet's Conifer announcement came after it began a strategic review nearly two years ago to evaluate options for Conifer, including a sale, merger or tax-efficient spinoff.
Since the hospital operator has not determined how the spinoff will be capitalized, it's unclear how the spinoff will affect the timing and pace of Tenet's delevering, said Fitch analysts. They said the hospital operator has indicated it would raise debt at Conifer and use it to pay off some of Tenet's debt.