Debt woes mount for US healthcare sector as interest rates rise | Financial Times
The industry is under pressure from increasing wages after loading up on leveraged loans
✒ US healthcare industry (among other industries) is showing distress in the loan as well as high yield bond market at times where interest rates are becoming much higher.
The sector has been operated with high leverage built upon very profit margins, some of the companies are sinking into debt distress as they struggle to contend with rising interest rates and labour costs having borrowed heavily to fuel a dealmaking boom.
The sector is no longer seen as “recession resistant” as the space is facing labour pressure from employees demanding higher wages, and the reimbursement rates pressure from the government.
Healthcare is the second most represented sector on Morningstar”s “leveraged loan” gauge, lagging only software businesses.