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Moody's cuts Rotech Healthcare outlook to negative
Moody's Investors Service said it revised Rotech Healthcare Inc.'s outlook to negative from stable and affirmed the company's Ba3 $75 million revolving credit facility due 2007, Ba3 $42 million senior term loan due 2008, B3 $300 million senior subordinated notes due 2012 and B2 corporate family rating.
The agency said the change in outlook reflects an unfavorable development in the reimbursement for the compounded version of Budesonide, an anti-inflammatory synthetic corticosteriod used primarily to treat asthma: the reimbursement will change from over $4.00 per 0.5 milligram to $0.29 per 0.5 milligram. The lower reimbursement for this drug will reduce revenue by about $30 million from Moody's original revenue forecast for 2006 and as a result, the company will report negative earnings and about $30 million in reduced cash flow for 2006.
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