Moody's keeps HCA on review for downgrade

In connection with its rating review for possible downgrade of HCA, Inc. Moody's Investors Service said that the proposed financing of the leveraged buyout of HCA could result in a downgrade of the corporate family rating to as low as the mid single B range from Ba2.

The potential for a multiple-notch downgrade reflects the significant increase in financial leverage expected to result from the proposed transaction. Based on information provided in filings with the Securities and Exchange Commission, Moody's estimated that the company's pro forma adjusted debt to adjusted EBITDA will exceed 6.7x for the 12 months ended June 30 if the buyout proceeds as contemplated.

Financial leverage of this magnitude would be expected to result in a significant decrease in financial flexibility in a period in which the acute care hospital sector faces challenges from weak volume trends and increasing exposure to uninsured and under-insured patients, the agency said.

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