Moody's rates DaVita loan B1

Moody's Investors Service said it assigned B1 ratings to DaVita Inc.'s proposed offering of $3.15 billion in senior secured credit facilities, consisting of a $250 million revolving credit facility, a $250 million term loan A and a $2.65 billion term loan B.

These facilities represent the second phase of financing related to DaVita's proposed acquisition of Gambro Healthcare, the U.S. dialysis clinics of Sweden's Gambro AB.

On March 22, DaVita issued $500 million senior unsecured notes due 2013 (rated B2) and $850 million senior subordinated notes due 2015 (rated B3) in the first phase of financing related to the acquisition.

Moody's said risks and concerns reflected in the ratings include those associated with the company's focus on a single line of business, the high concentration of revenues from the administration of Epogen and the potential for reimbursement changes, and the company's high reliance on reimbursement from private and managed care payors coupled with expectations for a tougher commercial pay contracting environment.

Positive factors supporting the ratings, according to Moody's, include DaVita's good cash flow generation supported by the recurring nature of revenues, the geographic diversification of revenue streams, which will be enhanced by the acquisition of the Gambro business, and continued favorable industry growth trends.

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