Moody’s drops Res-Care, loan

Moody's Investors Service said it downgraded Res-Care, Inc.'s corporate family rating to B1 from Ba3, probability of default rating to B2-PD from B1-PD and first-lien credit facility ratings to Ba3 from Ba2.

Concurrently, the agency lowered the speculative grade liquidity rating to SGL-3 from SGL-2. The SGL rating will be withdrawn.

The outlook remains stable.

Moody’s said the downgrade reflects greater than anticipated business risk as demonstrated by the material contraction in Res-Care's earnings in fiscal 2015. Moreover, the agency anticipates that the residential segment will continue to be pressured and that costs will remain elevated, which will limit earnings and cash flow growth.

Deterioration in the company's liquidity profile also factored into the downgrade.

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