S&P upgrades Gentiva Health

Standard & Poor's said it raised its corporate credit rating on Gentiva Health Services Inc. to B from B- as a result of improved margins and the company's ability to generate more than $100 million of free operating cash flow. The outlook is stable.

At the same time, S&P raised its issue-level ratings on the company's senior secured credit facility, which includes a $180 million term loan A, $550 million term loan B and $110 million revolver, to B+ from B. The recovery rating on this debt is 2, indicating an expectation for substantial (70%-90%) recovery of principal in the event of payment default.

In addition, S&P raised its issue-level ratings on the company's $325 million senior unsecured notes to CCC+ from CCC. The recovery rating on this debt is 6, indicating an expectation for negligible (0%-10%) recovery of principal in the event of a payment default.

"Our ratings on Atlanta-based Gentiva Health Services Inc. reflect the company's significant reliance on Medicare payments that continue to be under pressure, particularly in the home health sector," said S&P credit analyst Tahira Wright in a news release. "The ratings also reflect the company's $1 billion debt-financed acquisition of hospice provider Odyssey Healthcare in 2010."

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