Moody's upgrades Sante Cie

Moody's Investors Service said it upgraded Takecare Bidco's (Sante Cie) corporate family rating to B2 from B3 and its probability of default rating to B2-PD from B3-PD. The agency also raised to B2 from B3 the ratings on the €530 million backed senior secured term loan B due June 2028 and on the €90 million backed senior secured revolving credit facility due December 2027. The outlook has been changed to stable from positive.

“The upgrade of the ratings to B2 reflects the company's sustained improvement in earnings with high organic revenue growth of 8% to 10% driven by market share gains, resilient and relatively higher margins compared to rated peers, which led to a marked reduction in financial leverage in 2022 to 6.2x from 7.1x in 2020 despite the current high-cost inflation environment,” Moody’s said in a press release.

Working against the company though, is its small size, ongoing tariff cuts in the French and German homecare services markets, its high leverage, which stands at 6.2x as of Dec. 31, active M&A strategy, which might delay any deleveraging going forward and its high capital spending requirements, which limit free cash flow generation, the agency warned.

“The stable outlook reflects Moody's expectations that Sante Cie will be able to maintain credit metrics commensurate with the B2 rating over the next 18 months on the back of at least stable earnings in 2023 and continued but slower EBITDA growth thereafter, leading to a Moody's adjusted leverage decreasing towards 5.5x by 2024,” Moody’s said.

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