Moody's rates Hanger Orthopedic loans B2, notes B3

Moody's Investors Service said it has assigned a rating of B2 to the proposed first-lien credit facilities of Hanger Orthopedic Group, Inc., consisting of a $75 million senior secured first-lien revolving credit facility and a $230-million senior secured first-lien term loan, and a B3 rating to the proposed $190 million senior unsecured notes. Additionally, Moody's affirmed the corporate family rating of B3.

The outlook is stable.

The key factors currently influencing the B3 rating are its high leverage, weak free cash flow, tepid revenue growth trends and an unfavorable reimbursement environment, the agency said.

The stable outlook reflects Moody's expectation that the company will maintain a ratio of adjusted free cash flow to adjusted debt at roughly 3% (exclusive of extraordinary or non-recurring items), together with evidence of stabilization in top-line revenue growth in the near to medium term, metrics that will enable it to remain comfortably within the parameters of a B3 rating.

If Hanger is unsuccessful in obtaining material incremental Linkia revenues beyond the Cigna contract that became effective in October 2005 and if other sales initiatives such as WalkAide and Total Care fail to generate improved same store growth, Moody's said it may consider downgrading the company's ratings.

Moody's said it notes that the company has been reasonably successful in achieving expense reductions during the past two years, which has served to partially offset the difficulties in obtaining material top-line growth.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.