U.S. markets closed
  • S&P Futures

    4,130.50
    -2.25 (-0.05%)
     
  • Dow Futures

    33,530.00
    -40.00 (-0.12%)
     
  • Nasdaq Futures

    13,967.75
    -8.00 (-0.06%)
     
  • Russell 2000 Futures

    2,223.00
    -1.90 (-0.09%)
     
  • Crude Oil

    60.53
    +0.35 (+0.58%)
     
  • Gold

    1,746.60
    -1.00 (-0.06%)
     
  • Silver

    25.40
    -0.03 (-0.12%)
     
  • EUR/USD

    1.1959
    +0.0004 (+0.04%)
     
  • 10-Yr Bond

    1.6230
    -0.0520 (-3.10%)
     
  • Vix

    16.65
    -0.26 (-1.54%)
     
  • GBP/USD

    1.3760
    +0.0008 (+0.06%)
     
  • USD/JPY

    108.8700
    -0.1780 (-0.16%)
     
  • BTC-USD

    63,386.80
    +3,271.93 (+5.44%)
     
  • CMC Crypto 200

    1,358.50
    +64.51 (+4.99%)
     
  • FTSE 100

    6,890.49
    +1.37 (+0.02%)
     
  • Nikkei 225

    29,751.61
    0.00 (0.00%)
     

U.S. Anesthesia Partners, Inc. -- Moody's affirms U.S. Anesthesia Partners' B3 CFR, outlook changed to stable from negative

·16 min read
  • Oops!
    Something went wrong.
    Please try again later.

Rating Action: Moody's affirms U.S. Anesthesia Partners' B3 CFR, outlook changed to stable from negativeGlobal Credit Research - 11 Feb 2021New York, February 11, 2021 -- Moody's Investors Service ("Moody's") affirmed the B3 Corporate Family Rating (CFR) and B3-PD Probability of Default Rating of U.S. Anesthesia Partners, Inc. ("USAP"). Moody's also affirmed the B2 rating on the company's senior secured first lien credit facilities and Caa2 rating on its secured second lien term loan. At the same time, the outlook was changed to stable from negative.The change of outlook to stable reflects improved business performance in recent quarters after a severe decline in business volumes in the second quarter of 2020 due to coronavirus pandemic.The rating affirmation reflects, in part, the company's very good liquidity supported by a sizeable cash balance ($267 million) and full revolver availability ($200 million) at the end of September 30, 2020. Moody's notes that USAP needs to address its revolver maturity, currently expiring in June 2022. USAP has historically paid dividends to its shareholders and Moody's assumes that a portion of the company's cash will be eventually paid as dividends. The rating affirmation also reflects Moody's view that the company's debt/EBITDA will remain below 7.5x in 2021 as business volumes recover.USAP remains out of network with UnitedHealth Group Incorporated ("UnitedHealth") (A3 long-term issuer rating) in Texas, Colorado and Washington states. Moody's expects that the recently passed No Surprise Act will be less onerous for providers like USAP than other previous legislative proposals focused on in-network median reimbursement rates. Moody's also expects that the No Surprise Act will raise the incentives for both payors and providers to go in-network. The affirmation of the company's CFR and stabilization of outlook also reflect the reduced downside risks for USAP in managing its exposure to UnitedHealth.Ratings Affirmed:Issuer: U.S. Anesthesia Partners, Inc.... Corporate Family Rating at B3... Probability of Default Rating at B3-PD... $200 million Senior Secured First Lien Revolving Credit Facility expiring in 2022 at B2 (LGD3)... $1,615 million Senior Secured First Lien Term Loan due 2024 at B2 (LGD3)... $300 million Senior Secured Second Lien Term Loan due 2025 at Caa2 (LGD6)Outlook Actions:... Outlook changed to stable from negativeRATINGS RATIONALEUSAP's B3 CFR reflects Moody's expectations that the company's financial leverage will decline in the next 12-18 months with the recovery of business volumes. The company's debt/EBITDA was approximately 6.7 times for the twelve months ended September 30, 2020. The ratings also reflect USAP's geographic concentration, as it operates in nine states, with a vast majority of revenues derived from Texas, Florida and Colorado. Moody's expects that the company will utilize its cash flow to fund acquisitions or to pay discretionary distributions to its owners. The company may also raise additional debt to fund acquisitions, as it has done in the past.The rating incorporates the benefits of USAP's ownership model, in which the physicians own a majority stake in the company. This results in high alignment between the company and its physician-owners. There is also a high degree of variability in USAP's physician compensation, which helps mitigate the impact on earnings of rate or volume pressures. However, these benefits are partially offset by the risk that the company (which is a non-public company) will need to "buy out" physicians who seek to retire or otherwise leave the organization, possibly by issuing debt. The rating also reflects the company's very good liquidity profile.Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. In addition, as a provider of anesthesia physician staffing, USAP faces high social risk. The No Surprise Act, which was signed into law in December 2020, will take the patient out of the provider-payor dispute. The inability to bill out-of-network patients for amounts over in-network rates will impact those companies that have sizeable out-of-network revenues. The extent to which each company will get impacted will depend on the percentage of out-of-network patients they treat and their specific billing and collections practices, including how often they balance bill and how aggressively they pursue collecting these balances. The company's financial policies are expected to remain aggressive reflecting its partial ownership by private equity investors (Welsh Carson Anderson & Stowe, Berkshire Partners, GIC, LP, and Heritage Group).FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSRatings could be downgraded if the company's operating performance weakens for reasons including loss of profitable contracts, or if unfavorable regulatory changes significantly impact the company. Ratings could also be downgraded if the company's financial policies become more aggressive or debt/EBITDA is sustained above 7.5 times. Ratings could also be downgraded if the company's liquidity profile weakens.Ratings could be upgraded if the company executes its growth strategy, resulting in greater scale and geographic diversification. Ratings could also be upgraded if the company's financial policies become more conservative, such that debt/EBITDA is sustained below 6 times.U.S. Anesthesia Partners provides anesthesia services through around 4,900 anesthesia providers in roughly 1,065 facilities in 11 major geographies across 9 US states. Net revenues were approximately $1.7 billion for the last twelve months ended September 30, 2020. The company is 46% owned by approximately 1,500 physician partners and management. The remaining share of the company is owned by Welsh Carson Anderson & Stowe (22%), Berkshire Partners (20%), GIC, LP (11%), and Heritage Group (1%).The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1037985. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Kailash Chhaya, CFA Vice President - Senior Analyst Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Jessica Gladstone, CFA Associate Managing Director Corporate Finance Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 © 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements. ​