Moody's rates Healthways SGL-1, revolver Ba2

Moody's Investors Service said it assigned a Ba2 corporate family rating and SGL-1 speculative grade liquidity rating to Healthways, Inc. and a Ba2 rating to the company's proposed $400 million revolver.

The outlook for the ratings is stable.

This is the first time Moody's has assigned ratings to Healthways. The proposed revolver plus cash is intended to fund the acquisition of LifeMasters Supported SelfCare, Inc.

Despite the modest amount of pro forma financial leverage for the proposed acquisition, the ratings are constrained by the sizeable concentration risk in its customer base (roughly 38% of revenues were from its top two clients in fiscal 2005) and its relatively small consolidated revenue base, the agency noted.

The ratings also reflect the leading position of the company in the disease management sector and the expectation of continued strong revenue growth from both new customers and the expansion of existing customer relationships, Moody's said.

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