S&P raises HealthSouth

Standard & Poor's said it raised the B corporate credit rating on HealthSouth Corp. to B+, unsecured debt to B+ from CCC+ with the recovery rating revised to 4 from 6 and preferred stock to CCC+ from CCC.

The agency assigned BB issue and 1 recovery ratings to its proposed $500 million senior secured credit facility due in 2015 and B+ issue and 4 recovery ratings to HealthSouth's proposed senior notes due in 2018 and 2022.

The speculative-grade ratings reflect the company's narrow service niche and difficult regulatory and reimbursement environment tied to its focus as the largest provider of inpatient rehabilitative health care services in the United States, according to the agency.

Ratings also reflect HealthSouth's aggressive financial risk profile, the agency noted.

HealthSouth's weak business risk profile reflects the risks of operating in only one business that is reliant on one source for a large percentage of its revenues, S&P said.

Increasing EBITDA coupled with some debt repayment has resulted in a reduction in lease-adjusted debt-to-EBITDA ratio to 4.8x as of June 30 from 6.2x as of December 31, 2008, the agency noted.

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