Moody's pares Premise Health

Moody's Investors Service said it downgraded Premise Health Holding Corp.'s corporate family rating to B3 from B2 and probability of default rating to B3-PD from B2-PD. The agency also pared the first-lien senior secured credit facilities to B2 from B1 and assigned a B2 rating to the new incremental term loan and the extended senior secured revolving credit facility.

The downgrades follow the reported incremental $191 million incremental term loan which will be used to fund a $185 million distribution to shareholders. Premise extended its revolver’s maturity to April 2025.

“The downgrade to B3 reflects the more aggressive nature of Premise's financial policies, a key governance issue. Premise will be meaningfully increasing leverage, roughly two turns, to fund the shareholder distribution. Leverage, pro-forma for the distribution rises from 5.8x to 7.8x. Combined with higher initial gross financial leverage, and the use of a significant portion of the cash balances to fund the distribution, there is a greater risk that debt/EBITDA will remain above 6x beyond the next 12-18 months,” Moody’s said in a press release.

The outlook remains stable.

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