Moody’s drops Valitas Health, facility

Moody's Investors Service said it downgraded Valitas Health Services, Inc.'s corporate family rating to Caa3 from Caa1, probability of default rating to Caa3-PD from Caa1-PD and senior secured bank credit facility ratings to Caa2 from B3.

The outlook remains negative.

Moody’s said the action reflects its concerns regarding the company's weak liquidity profile, including minimal cushion under the company's financial covenants due to earnings volatility and approaching step-downs. As a result, the agency expects that a waiver or an amendment will be required over the near-term.

The company's weak liquidity profile also reflects approaching debt maturities, including the revolver expiration in June 2016 and term loan maturing in June 2017.

Moody’s said the downgrade also reflects uncertainty related to the company's Florida contract, the company's largest customer, as the state announced its plan to place its healthcare services contract up for re-bid by the end of 2015.

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