S&P affirms RadNet term loan

S&P said it affirmed its B issue-level rating on RadNet Management Inc.'s first-lien term loan following the company's announcement that it will increase the facility size by $170 million to refinance its existing second-lien debt. The recovery rating is 3, indicating an expectation for meaningful (50%-70%; rounded estimate: 50%) recovery in the event of payment default.

The agency revised the estimated recovery percentage to 50% from 65%, reflecting higher expected first-lien debt in a default scenario.

All other ratings on RadNet, including the B corporate credit rating, are not affected by this transaction.

The outlook is stable.

“Our ratings on RadNet continue to reflect the company's niche focus as a provider of fixed-site diagnostic imaging services, as well as our belief that the diagnostic imaging industry remains very competitive and is subject to reimbursement pressure over time,” S&P said in a news release.

The refinancing is a leverage-neutral transaction, with leverage expected to remain in the 5x range.

“We also project RadNet to generate about $25 million to $30 million in annual free operating cash flow,” the agency added in the release.

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