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Investing.com -- Fitch Ratings has downgraded Humana Inc.’s (NYSE:HUM) ratings due to ongoing margin pressure and reduced Medicare Advantage quality bonus payments.

The rating agency lowered the Insurer Financial Strength ratings for Humana’s insurance subsidiaries to ’A-’ from ’A’ and downgraded the company’s Long-Term Issuer Default Rating to ’BBB’ from ’BBB+’. Senior notes ratings were cut to ’BBB-’ from ’BBB’. The outlook remains stable.

Fitch cited concerns that Humana’s EBITDA-based margins are unlikely to recover to levels supporting previous ratings. The downgrade reflects elevated healthcare utilization across the sector and significantly lower Medicare Advantage-related quality bonus payments resulting from a decline in Humana’s Star Ratings on its largest MA contract.

The company has appealed the October 2025 dismissal of its lawsuit challenging the Centers for Medicare & Medicaid Services’ Star rating methodology. A favorable ruling could substantially improve Humana’s operating margin in 2026 through resumed bonus payments.

Humana’s debt-to-EBITDA ratio was approximately 3.6x for the 12 months ended September 30, 2025, significantly above guidelines for the prior ratings. Fitch expects continued margin pressure in 2026 to keep this metric above expectations.

The rating agency noted that Humana maintains adequate capitalization with a risk-based capital ratio of about 235% at year-end 2024, though it anticipates this will be managed at 200%-225% over the longer term.

Financial leverage increased significantly following Humana’s August 2021 acquisition of the remaining 60% of Kindred at Home, though it declined after the August 2022 sale of a 60% interest in Kindred’s hospice business to a third party.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Investing.com -- S&P Global Ratings has revised its outlook on Sumitomo Corp. to negative from stable while affirming its ’A-’ ratings following the company’s ¥880 billion tender offer for SCSK Corp.

The rating agency believes the tender offer will significantly reduce Sumitomo’s financial capacity, representing about 20% of the company’s adjusted capital as of March 31, 2025, and approximately 1.5 times its expected net profit over the next one to two years.

S&P projects Sumitomo’s capital adequacy ratio will decline to 95%-105% under its ’A’ stress scenario over the next one to two years, raising concerns about the company’s ability to maintain financial soundness measures at a level consistent with current ratings.

The agency noted that Sumitomo’s conservative financial management has been slightly declining, pointing to the revision of its policy of maintaining positive free cash flow after shareholder returns. This change reflects the company’s intention to prioritize growth investments over maintaining a sound financial profile.

Despite these concerns, S&P expects Sumitomo to maintain record-level net profit over the next one to two years, driven by businesses in which the company has strengths. The agency also believes the company’s path to profit accumulation is predictable and the risk of failing to recover its investment is relatively low.

The negative outlook reflects S&P’s view that there is more than a one-in-three possibility of Sumitomo’s adjusted capital falling below risk-based capital required under its ’A’ stress scenario while financial capacity remains significantly reduced.

S&P would consider a downgrade if capital adequacy falls below 100% or if return on risk-weighted assets looks likely to drop to nearly 10% due to net income falling below ¥350 billion. The outlook could be revised to stable if the capital adequacy ratio consistently exceeds 100% under the ’A’ stress scenario with strong returns due to asset sales and curbed investments over the next one to two years.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Investing.com -- S&P Global Ratings has downgraded Whirlpool Corp. to ’BB’ from investment grade, with a negative outlook, citing slower-than-expected improvement in credit metrics.

The rating agency reported that Whirlpool’s adjusted leverage reached 6x for the 12 months ending September 30, 2025, compared to 5.9x in the same period of 2024. The company’s performance has been hampered by weaker margins, particularly in the third quarter where ongoing EBIT margin declined 140 basis points year-over-year to 4.5%.

Competitive pressures have intensified as Asian competitors accelerated imports ahead of tariff implementation. While Whirlpool reported higher sales and market share growth in its North America major device appliance segment during the third quarter, supported by refreshing approximately 30% of its product portfolio, elevated flooring costs to help retailers stock new models and clear older inventory offset these gains.

S&P expects these costs will continue to weigh on margins through the rest of 2025 and into 2026. The agency projects 2026 demand will remain heavily weighted toward lower margin replacement volume, with discretionary demand improvements potentially not materializing until later in 2027.

The rating agency now forecasts adjusted EBITDA margins to improve approximately 70 basis points in 2026, following flat performance in 2025. This improvement is expected to be driven by pricing actions to offset tariff-related costs and benefits from recent cost reduction initiatives.

S&P also noted that proceeds from Whirlpool’s planned sale of its stake in Whirlpool India will be lower than previously anticipated. The company received $166 million from selling an 11% stake in November 2025 and plans to sell an additional 20%, which S&P estimates will generate about $250 million in 2026. Total proceeds are now expected to reach approximately $420 million, down from earlier projections of $550 million.

The combination of weaker margin forecasts, lower proceeds from the India stake sale, and relatively high dividend payments has resulted in reduced discretionary cash flow available for debt repayment. S&P now projects adjusted leverage will remain elevated at about 5.4x in fiscal 2025 and 4.9x in fiscal 2026.

Whirlpool faces upcoming debt maturities, with its revolving credit facility becoming current in May 2026 and $516 million of bonds maturing in November 2026. S&P expects the company will need to access capital markets for refinancing, potentially at higher pricing and with additional covenants.

The negative outlook reflects the possibility of a further downgrade within the next 12 months if Whirlpool continues to underperform expectations due to competitive pressures or deteriorating economic conditions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Investing.com -- S&P Global Ratings has upgraded Lumexa Imaging Equity Holdco LLC to ’B+’ from ’B-’ following its initial public offering, with a stable outlook.

The upgrade reflects Lumexa’s reduced private equity control, with Welsh, Carson, Anderson & Stowe’s (WCAS) ownership declining to 30% post-IPO, down from a controlling stake. Public shareholders will own 26%, while employees, physicians, and health system partners will hold 44%.

S&P views this ownership change as "meaningfully credit positive" for Lumexa’s financial policy, as private equity investors typically favor higher leverage. WCAS will have just one seat on the nine-person board, with six independent members.

The rating agency expects Lumexa to reduce its leverage below 5x within a year from the current 7.4x. The company plans to use approximately $375 million of IPO proceeds to reduce debt, which would immediately lower leverage to about 5.3x.

Lumexa operates in the diagnostic imaging sector, which S&P believes will benefit from rising demand due to an aging population and scientific advances. The company is also positioned to capitalize on the shift toward lower-cost outpatient settings for diagnostic imaging.

Despite these positive factors, S&P notes some challenges, including wage inflation for radiologists and persistent reimbursement pressures. Medicare reimbursement, which represents about 24% of Lumexa’s 2024 revenue, has been relatively flat for the past decade, while commercial payers are limiting reimbursement increases.

The company is pursuing software tools, including AI modules, to improve radiologist productivity and offset margin pressure. Lumexa plans to focus on expanding its footprint by opening new locations, though profitability at these sites is initially weaker.

S&P could lower Lumexa’s ratings if leverage remains above 5x for more than a year, which might occur if the company pursues debt-financed acquisitions or faces significant increases in labor costs. Conversely, a rating upgrade could follow if Lumexa reduces leverage below 4x and maintains it at that level.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.