Moody's: Managed Health outlook positive

Moody's Investors Service said it changed the outlook of Managed Health Care Associates, Inc. to positive from stable and affirmed its ratings, including the B3 corporate family and probability-of-default ratings, B1 (LGD2) $15 million senior secured revolving credit facility due 2013 and $155 million senior secured term loan B due 2014 and Caa2 (LGD5, 83%) $95 million second-lien term loan due 2014.

The loss-given-default rate assigned to the senior secured loans was changed to 28% from 29%.

The agency said the positive outlook reflects Managed Health's strong financial performance relative to Moody's expectations driven by better-than-expected revenue growth and more favorable operating margins; faster-than-expected reduction in financial leverage; and the potential for further near-term deleveraging as a result of continued growth in EBITDA and debt repayment funded by the company's strong free cash flow generation.

The B3 corporate family rating reflects the company's small absolute size and the considerable financial leverage, Moody's said.

The agency said that among the company's credit strengths are its strong operating margins and low capital requirements, Managed Health's dominant position in its niche market and its good liquidity position.

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