S&P gives CRC Health loans B, CCC+

Standard & Poor's said it affirmed its B corporate credit rating on CRC Health Corp.

The outlook is stable.

The agency also assigned a B issue-level rating to the company's $65 million revolver and $475 million first-lien term loan. The recovery rating on the revolver and loan is 3, indicating meaningful (50%-70%) recovery in the event of payment default.

In addition, S&P assigned a CCC+ issue-level rating to the company's second-lien term loan. The recovery rating on the loan is 6, indicating negligible (0%-10%) recovery in the event of payment default.

"The rating on substance abuse treatment provider CRC Health reflects its 'weak' business risk profile, which considers its very narrow focus as a leading provider within the highly fragmented and modestly cyclical substance abuse treatment industry," S&P credit analyst Tahira Wright said in a news release.

"We consider these services to be relatively discretionary with exposure to reputational risk. The company's 'above average' EBITDA margins as compared with peers somewhat offsets these factors. CRC Health's 'highly leveraged' financial risk profile reflects our expectation of pro forma debt leverage above 8x through 2014. We expect the company will continue to press forward with its repositioning initiatives to focus on substance abuse treatment," Wright added in the release.

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