S&P: Six nursing homes operators on negative watch

Standard & Poor's said it placed the corporate credit and issue-level ratings on all of its six rated for-profit nursing home operators on CreditWatch with negative implications.

The ratings on negative watch include Drumm Investors LLC's B+ ratings, Genoa Healthcare Group LLC's B ratings, HCR HealthCare LLC's B ratings, Kindred Healthcare Inc.'s B+ ratings, Skilled Healthcare Group Inc.'s B ratings and Sun Healthcare Group Inc.'s B ratings.

Less than one year removed from Medicare's rate increases to nursing homes, the Centers for Medicare and Medicaid Services has decided to reduce rates 11.1%, S&P said, and adversely revise reimbursement guidelines for therapy services for fiscal year 2012.

The new rates and guidelines become effective Oct. 1, the agency said.

The consequent reimbursement changes could reduce EBITDA for the six nursing home companies rated, S&P said.

The agency said it will review the financial implications of these developments in light of the aggressive and highly leveraged capital structures of the companies in this sector.

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