RHC had a quarterly update today. It’s good. That’s great.

RHC’s earnings had been crushed by the pandemic, more so than many other firms. Hospitals are where the sick people go, COVID produced many sick people that needed to be quarantined, and, to keep vulnerable patient populations safe, and doctors (and nurses) available, non-essential surgery was essentially halted for months.

So earnings and cashflows plunged.

That’s especially problematic given RHC’s debt burden.

Hence today’s news is fairly dramatic/defining.

Firstly, things are getting better, with volumes improving over the quarter and into October.

And secondly, the banks are being cognizant that the cashflow impacts are short term in nature, and will essentially look through them.

That’s vital, we’d thought there was a chance RHC would be pushed into a dilutive capital raise by less than forgiving bankers, given the KKR deal fell through, and the deterioration in the business over the past year.

Those risks are greatly lessened now. Not eliminated, if COVID bounces back, RHC are right back in the muck. But, as things stand today, the risk/reward skew is much improved.

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