Moody's ups Tenet Healthcare

Moody's Investors Service said it raised Tenet Healthcare Corp.'s corporate family rating to B1 from B2 and its probability of default rating to B1-PD from B2-PD. Moody's also upgraded the company's senior unsecured debt to B3 from Caa1 and its speculative grade liquidity rating to SGL-1 from SGL-2.

The agency affirmed Tenet's senior secured first-lien and second-lien debt ratings at B1 and revised the outlook to stable from positive.

“The upgrade of the corporate family rating reflects the company's continuing improvement in leverage over the past few years and Moody's expectations that the company will continue to operate with moderate leverage. Debt/EBITDA was 5.3 times as of Dec.31, 2021, and Moody's expects leverage will remain in the low five times range over the next 12 to 18 months.

“The upgrade also reflects the company's recent decision that it will retain its Conifer Health Solutions business rather than pursue a spinoff or other corporate action. While Conifer is a modest part of the company it does generate a significant level of free cash flow as it is a relatively asset-lite model compared to Tenet's Hospital and ambulatory surgical center businesses,” Moody’s said in a press release.

The revised outlook reflects the position that Tenet will continue operating with significant scale and diversity over the next 12-18 months while maintaining moderately high financial leverage,” the agency said.

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