Moody’s assigns B3 to Envision notes

Moody's Investors Service said it assigned a B3 instrument rating to Envision Healthcare Corp.’s new $750 million senior unsecured notes.

Proceeds will be used alongside a $3.3 billion senior secured term loan and a resized $850 million ABL revolver to refinance legacy debt at Envision and AmSurg Corp. in conjunction with the two companies' planned merger.

The new notes will be pari passu with other existing senior unsecured debt of the combined firm.

All other ratings relating to Envision, including its B1 corporate family rating and B1-PD probability of default rating, remain unchanged.

The outlook is positive.

Moody’s expects the merger to be completed in early December.

Moody’s said the B1 corporate family rating reflects the significant integration risk that Envision will face upon consummating its transformational AmSurg merger and the expectation that adjusted debt to EBITDA will remain relatively high around 4.5 times in the near-term.

Furthermore, the agency said it expects that free cash flow will be used to fund the company's aggressive acquisition strategy in lieu of debt repayment.

In addition, the high level of reliance on government reimbursement programs remains an ongoing concern, Moody’s added.

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