Euler Hermes Rating has determined that the Schön Klinik Group has a moderate business risk. Rating strengths include a good market position from the Group’s specialisation in attractive medical growth disciplines, large business opportunities from privately insured patients and generally low sector volatility. In the agency’s view, the Group enjoys sustainable potential for growth due to demographic trends, national and international acquisitions and systematic expansions of its service portfolio. Analysts see rating weaknesses in the generally high dependence on regulatory factors and the systemic decoupling of cost trends from income trends. As the health sector becomes increasingly digitalised, analysts expect to see the emergence of new business, care and value creation models alongside growing pressure for change in future. In Euler Hermes Rating’s view, Schön Klinik is responding proactively to the structural change.
The rating agency considers the Schön Klinik Group’s financial risk to be moderate to slightly increased. Its earnings power has been declining recently, pushing down the capital structure to a satisfactory level. Its performance was weakened by an unexpectedly strong decline in foreign patients, one-off effects, up-front costs for the international expansion and adverse regulatory impacts (FDA). A sweeping reorganisation was implemented and structural costs adjusted to boost earnings power. Euler Hermes Rating expects that these actions will stabilise earnings power, repayment periods and interest coverage ratios at a satisfactory level in the medium term. The Group has generally solid cash flows, which the analysts view as a rating strength. In the short term, the Group’s economic performance strongly depends on the currently unpredictable progression of the COVID-19 pandemic, the utilization of available ICU capacity and the severity of cases. This may cause significant unplanned earnings risks to materialise. Furthermore, as a specialised provider, the Group is highly dependent on elec-tive procedures, which have been rigorously deprioritised. The analysts believe that the current version of the COVID-19 Hospital Relief Act covers only part of the lost revenue for these procedures.
The Schön Klinik Group is one of the largest private-sector hospital operators in Germany. The Group and its hospitals generated approx. € 882 million in gross revenue in 2019. Around 111,000 episodes of in-patient care were provided in 2019. The hospitals have approx. 5,200 beds. Its medical specialities are orthopaedics, psychosomatic medicine, neurology, surgery and internal medicine.
Euler Hermes Rating GmbH (Euler Hermes Rating) was founded in 2001 as an independent European rating agency of the Euler Hermes and Allianz Group focusing on issuer and issuance ratings. Euler Hermes Rating is registered as a credit rating agency (CRA) in accordance with Regulation (EC) No 1060/2009 of the European Parliament and Council (as amended) and is considered as an external credit assessment institution (ECAI) by the European Banking Authority (EBA). Euler Hermes Rating is a subsidiary of Euler Hermes (ELE:PA), the world leader in trade credit insurance. The Moody’s group owns a minority stake in Euler Hermes Rating.
The rating agency publishes current ratings on eulerhermes-rating.com.
This rating was prepared on the basis of the current issuer rating method of Euler Hermes Rating GmbH, which is published at eulerhermes-rating.com.
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