Moody's cuts U.S. Renal Care

Moody's Investors Service said it downgraded U.S. Renal Care, Inc.'s corporate family rating to Caa1 from B3 and probability of default rating to Caa1-PD from B3-PD. The agency also lowered the senior secured rating to B3 from B2 and the senior unsecured rating to Caa3 from Caa2.

“The downgrade reflects headwinds currently faced by U.S. Renal including challenges to grow earnings caused by on-going labor cost inflation and a protracted recovery from lower treatment volumes due to the pandemic,” the agency said in a press release.

Moody's said it forecasts U.S. Renal’s leverage to stay above 8x over the next 12-18 months.

“In addition, Moody's expects liquidity, currently good, will deteriorate due to sustained investment in new dialysis clinics, which will lead to negative free cash flow. Moody's views U.S. Renal's capital structure as increasingly unsustainable due to very high leverage that the company will be challenged to reduce over the next 12-18 months,” the agency said.

The outlook is stable.

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