Moody's cuts Apria

Moody's Investors Service said it lowered Apria Healthcare Group, Inc.'s corporate family and probability of default ratings to B1 from Ba3 and changed the outlook to stable.

Moody's also lowered the company's $700 million of senior secured A-1 notes to Ba3 (LGD3, 39%) from Ba2 (LGD3, 35%) and the $318 million of senior secured A-2 notes to B3 (LGD5, 84%) from B1 (LGD5, 81%). Moody's assigned a speculative-grade liquidity rating of SGL-2.

The downgrade reflects the company's below expectations operating and financial performance in 2010 and the view that future credit metrics will be more aligned with the B1 rating category, the agency said.

The ratings reflect Apria's high leverage and weak cash flow, ongoing exposure to reimbursement risk, lower EBITDA margin relative to industry peers and a shareholder-oriented focus, the agency added.

The ratings consider Apria's scale as the leading provider of home healthcare products and services in the United States with significant market share in home respiratory and home infusion therapy, the agency said.

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