S&P rates HealthSouth loan BB+

Standard & Poor’s said it assigned a BB+ rating to HealthSouth’s proposed $150 million senior secured loan due 2019.

The recovery rating is 1, indicating 90% to 100% expected default recovery.

The BB+ rating on the company’s revolving credit facility, BB- rating on the senior notes and B- rating on its convertible preferred stock are unchanged.

There also are no changes to the recovery ratings.

The outlook remains stable.

The proceeds will be used to refinance in part the redemption of notes due 2018.

The ratings reflect the company’s weak business risk profile, highlighted by its operation in a single line of business that relies on one source for a large percentage of its revenues, S&P said.

With more than 70% of its total revenues subject to Medicare reimbursement and regulatory changes for inpatient rehabilitation services, the agency said it views HealthSouth as vulnerable in the long term to adverse reimbursement and regulatory risks in its inpatient rehabilitation business.

The ratings also consider the company’s significant financial risk profile, reflecting an expectation that leverage will remain at more than 3x, S&P said.

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