Meinian Onehealth Healthcare Holdings Co., Ltd. 's (Meinian Onehealth, B2 negative) rating reflects the company's leading position in China 's (A1 stable) private medical examination sector and its exposure to the country's growing preventive healthcare industry.

At the same time, the rating is constrained by Meinian Onehealth's weak liquidity profile, its strategy of growing through acquisitions and multistep investments, execution risks associated with shifting toward a more premium service offering and regulatory risks.

Meinian Onehealth's weak liquidity, which is partly a result of its reliance on short-term funding, leaves its credit profile vulnerable to volatility in the operating environment and funding market.

We expect the company's 2022 revenue to be at a level similar to that in 2021 despite its increasing number of medical centers in the first half of 2022, due to disruptions caused by pandemic-related controls. We also expect the company's adjusted EBITDA margin to decrease to around 18%-19% for 2022 from 20.7% in 2021 because of higher fixed costs associated with the increasing number of medical centers.

We expect the company's leverage to increase to 3.5x-3.7x in 2022 because of likely weaker earnings. Nevertheless, we expect its leverage to improve to 3.1x in 2023 as its business recovers.