Moody's affirms Matria Healthcare

Moody's Investors Service said it affirmed Matria Healthcare, Inc.'s senior unsecured issuer rating at B2 and its corporate family rating at B1 and withdrew the B3 rating of Matria's $86.25 million convertible senior subordinated notes due 2024, following their conversion to equity in May.

The outlook remains stable.

The ratings affirmation is based on Moody's expectation that Matria will continue to report sales growth of at least 10% and stable EBIT margins over the near to medium term while it improves operating cash flow compared to the low levels exhibited in fiscal 2004, the agency said.

Factors affecting the ratings include the history of volatile operating performance; negative long term trends in the Women's and Children's Health segment, which over the past several years has suffered from falling reimbursement rates and a decreasing patient census; potentially increasing competition in the disease management business from major pharmacy benefit managers and concerns over whether Matria and the disease management industry can sustain the growth experienced in recent years, Moody's added.

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