Moody's cuts CRC Health

Moody's Investors Service said it downgraded the corporate family and probability of default ratings of CRC Health Corp. to B3 from B2 along with its $100 million senior secured credit facility and $420 million senior secured term loan to B1 (LGD2, 27%) from Ba3 (LGD2, 28%). The agency said it affirmed the Caa1 (LGD5, 77%) rating on the company's senior subordinated notes and its speculative grade liquidity rating at SGL-3.

The outlook was changed to stable from negative.

The ratings reflect an expectation that the company will continue to operate with high leverage and modest interest expense coverage as operating pressures in the healthy living division have impeded improvements in credit metrics, Moody's said.

The stable outlook reflects an expectation that the company will continue to benefit in the near term from the reduction of its cost base, the agency said, but could face continued pressure in growing the top line until broader economic conditions improve.

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