Moody's cuts Concentra outlook to negative

Moody's Investors Service said it changed the outlook for Concentra Inc. to negative from stable, citing weaker than anticipated credit metrics and the potential for further deterioration if the employment environment weakens significantly in 2009.

Concentra's operating performance has been pressured by the extent and duration of the slump in construction and other physical labor-related employment and its direct effects on the company's core workers compensation business, Moody's said, noting it believes that, as several sectors are impacted by the economic slowdown, these issues could be exacerbated by lower volumes in pre-employment drug screening, and other non-injury related services.

Moody's said it is further concerned about the possibility that, in a slower economic environment, fewer workplace injuries will be reported and treated.

Moody's added that it affirmed the B2 corporate family rating, affirmed the B2 probability of default rating, affirmed the B1 (LGD 3, 34%) ratings on the $75 million senior secured revolver and $330 million senior secured term loan B and affirmed the Caa1 (LGD 5, 85%) rating on the $155 million Second-lien PIK Toggle term loan C.

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