Moody's gives negative outlook to Rural/Metro

Moody's Investors Service said it assigned a negative outlook to Rural/Metro Corp. and its subsidiary, Rural/Metro LLC, concluding a rating review begun on March 6.

The agency also confirmed Rural/Metro's corporate family and probability-of-default ratings at B2 and its 12¾% senior discount notes at Caa1 (LGD6) and Rural/Metro LLC's senior secured credit facilities at Ba2 (LGD2) and its 9 7/8% senior subordinated notes at B3 (LGD4).

The loss-given-default rates assigned to the debt issues were changed to 91% from 92% for Rural/Metro's notes, to 12% from 15% for Rural/Metro LLC's credit facilities and to 59% from 63% for Rural/Metro LLC's notes.

The ratings and outlook primarily reflect increasing levels of uncompensated care that are unfavorably impacting Rural/Metro's margins, the company's weak free cash flow, its rising leverage and an unfavorable payor mix, Moody's said.

Qualitative factors that provide upward support for the ratings include the fact that the company is a leading provider in the fragmented market for medical transportation services that will increasingly benefit from the aging of the U.S. population, the agency added.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.