Moody's stabilizes Encompass Health view

Moody's Investors Service said it revised Encompass Health Corp.'s outlook to stable from under review and confirmed its ratings, including its Ba3 corporate family rating, the Baa3 ratings on the first-lien senior secured revolving credit facility and senior secured term loan and B1 rating on the unsecured debt. There is no change to the speculative grade liquidity rating at SGL-1.

The ratings on the first-lien senior secured term loan will be withdrawn once the spinoff of Encompass’ home health and hospice divisions is completed. The spinoff becomes effective Friday. These rating actions conclude the review of Encompass' ratings started on Feb. 4, Moody’s said.

“The stable outlook reflects Moody's expectation that Encompass will maintain solid credit metrics but will also remain highly reliant on Medicare and vulnerable to potential reimbursement changes. Moody's anticipates that Encompass will continue to operate with leverage in the 3.5x range as labor pressures continue to compress margins and Encompass continues with its expansion plans,” the agency said in a press release.

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