Moody's affirms CRC Health

Moody's Investors Service said it affirmed CRC Health Corp.'s B2 corporate family and probability-of-default ratings and the speculative grade liquidity rating at SGL-2, but noted that available liquidity has diminished since the last rating action as the company has used and is expected to continue to rely on its $100 million revolving credit facility to fund acquisitions in excess of free cash flow.

Moody's also affirmed Ba3 ratings (LGD2, 29%) for the $100 million senior secured revolving credit facility and $420 million senior secured term loan and Caa1 rating (LGD5, 80%) $200 million senior subordinated notes.

The affirmation reflects Moody's belief that the company will continue to reflect metrics that are appropriate for the B2 rating category despite the increase in outstanding debt resulting from debt-financed acquisitions, the agency said.

The B2 rating reflects the considerable amount of financial leverage and modest cash flow coverage of debt metrics and the potential for continued acquisition activity, Moody's said.

The rating also reflects the fact that the company has now successfully integrated the operations of Aspen Educational Group and continues to be the largest provider of treatment services for addiction diseases and related behavioral disorders, a sector with attractive opportunities for growth, the agency said.

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