Moody's affirms HealthSpring

Moody's Investors Service said it affirmed the Ba3 senior secured debt rating of HealthSpring, Inc. following the announcement of a definitive agreement to acquire Bravo Health, Inc. for $545 million in cash.

The outlook is stable.

The agency said that while HealthSpring will increase its outstanding debt by $500 million to finance the acquisition, raising the debt-to-EBITDA ratio to about 2 times from its current level of approximately 0.7 times, this metric is expected to remain consistent with the current rating level.

Given the company's concentration in Medicare Advantage and the uncertainty as to the popularity and profitability of these products as a result of health-care reform, Moody's said that HealthSpring's financial flexibility will be somewhat diminished at the higher leverage ratio.

Offsetting this concern, Moody's said the acquisition will provide HealthSpring a larger membership base, providing opportunities for operating efficiencies in offering its Medicare Advantage products, which will result in an improvement in the company's credit profile.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.