Moody's cuts R1 RCM, rates loan Ba3

Moody's Investors Service said it downgraded to Ba3 from Ba2 R1 RCM, Inc.’s senior secured credit facilities consisting of a $600 million revolver due 2026, a $665 million term loan A due 2026, a $513 million term loan A due 2027 and a $495 million term loan B due 2029. The agency also assigned a Ba3 rating to the company's planned $500 million term loan B due 2029.

Moody’s concurrently lowered the company’s corporate family rating to Ba3 from Ba2 and its probability of default rating to Ba3-PD from Ba2-PD. The speculative grade liquidity rating remains SGL-2.

R1 will use the proceeds from the debt issuance along with $205 million of revolver draw and equity in the form of warrants will be used to buy Acclara Solutions Group, Inc. Moody’s said it estimates R1’s debt to EBITDA at close will be near 6x.

“The ratings downgrade reflects the very high pro forma leverage and diminished liquidity expected by Moody's from the pending acquisition, as well as the lengthy three-year onboarding process that the Providence contract entails before it will contribute meaningfully to earnings,” the agency said in a statement.

The outlook is negative.

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