Moody’s eyes AdaptHealth for downgrade

Moody’s Investors Service said it placed AdaptHealth LLC’s Ba3 Corporate Family Rating, Ba3-PD probability of default rating and B1 senior unsecured bond rating on review for downgrade. There is no change to the company’s SGL-1 speculative grade liquidity rating. The agency revised the outlook to ratings under review from stable.

The review is prompted by the company’s agreement to acquire AeroCare Holdings, Inc. for about $2 billion. AdaptHealth will pay $1.1 billion in cash, and the balance of $900 million will be funded by common and preferred shares issued to AeroCare’s shareholders.

“Moody’s considers the acquisition to be strategically sensible, as it will increase the company’s scale and broaden its geographic reach. However, Moody’s expects the cash portion of the transaction will be largely financed with debt and leverage will increase. The review for downgrade also considers the level of integration risk as this acquisition, the largest in AdaptHealth’s history, comes on the heels of more than $700 million of acquisitions undertaken in the first nine months of 2020,” the agency said in a press release.

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