Moody’s slices U.S. Renal

Moody’s Investors Service said it downgraded U.S. Renal Care, Inc.’s senior secured rating to Caa3 from B3 and the senior unsecured rating to C from Caa3. The agency also lowered the issuer’s corporate family rating to Caa3 from Caa1 and the probability of default rating to Caa3-PD from Caa1-PD and revised the outlook to negative from stable.

“The downgrade reflects the very high likelihood of a restructuring of U.S. Renal's capital structure due to the high debt burden relative to the company's earnings capacity. This also reflects headwinds currently faced by U.S. Renal including challenges to grow earnings caused by ongoing labor cost inflation and a slow recovery from lower treatment volumes during the pandemic,” the agency said in a press release.

Moody’s said it forecasts U.S. Renal’s leverage to stay above 10x over the next 12-18 months and for the company’s liquidity to suffer from the ongoing cash burn.

On the positive side, the agency noted the recent issuance of $328 million of unrated, super-priority first-lien debt, which boosted cash balances to close to $400 million.

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