Moody's rates CRC Health loan B2

Moody's Investors Service said it assigned a B2 rating to CRC Health Corp.'s new $230 million senior secured credit facilities, including the $25 million senior secured revolving credit facility due 2010 and $205 million senior secured term loan B due 2011.

Moody's also assigned a B2 senior implied rating and a B3 senior unsecured issuer rating to CRC. The outlook is stable.

According to Moody's, the B2 rating reflects the operational and financial risk inherent in the company's acquisition strategy, the execution challenges and increased leverage associated with the pending Sierra Tucson transaction, small revenue base and high exposure to government reimbursement in its Pennsylvania residential facilities.

Factors mitigating these concerns, Moody's said, include a strong payer mix with private pay accounting for about two-thirds of total revenues, a relatively successful track record of integrating and improving the operations of acquired companies, the long operating history and strong reputation of its residential treatment centers and the large and growing demand for its substance abuse rehabilitation treatment services.

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