Moody's rates Iasis loan, notes

Moody's Investors Service said it assigned B1 ratings to Iasis Healthcare Corp.'s proposed credit facilities and a B3 rating to the company's proposed senior subordinated notes offering. Moody's also confirmed the company's B1 senior implied rating and B2 senior unsecured issuer rating.

More specifically, Moody's assigned a B1 rating to the new $250 million senior secured revolving credit facility due 2010 and $425 million senior secured term loan due 2011 and a B3 rating to the new $475 million senior subordinated notes due 2014.

The outlook is stable.

Moody's said the ratings reflect Iasis' high leverage, which will increase further following the sale of the company, the company's significant capital expenditure requirements for near-term expansion projects, and the challenge in managing industry wide pressures on expenses, particularly for bad debt, labor and benefits, and insurance.

The ratings also recognize the high level of competition in the company's markets, the limited diversification of the company's portfolio, which consists of 15 hospitals in five markets, the company's short operating history, and concerns over the industry wide weakness in volume trends.

Factors that support the ratings, Moody's added, include the company's favorable financial performance, which has been driven by strong same facility revenue growth in the hospital segment, the stability in core operations, and its more limited reliance, relative to for-profit peers, on acquisitions to drive growth. The ratings also consider the stable Medicare reimbursement environment, positive demographic trends, the higher population growth anticipated for the company's markets as compared to the national average, and, in spite of the increase in leverage, the company's good liquidity position following the close of the transaction.

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