Moody's rates MedQuest loan B1

Moody's Investors Service said it assigned a rating of B1 to MedQuest Inc.'s $60 million senior secured term loan.

Additionally, the B2 senior unsecured issuer rating at MedQuest has been reassigned to MedQuest's parent company, MQ Associates Inc., and the rating is revised to Caa1.

Moody's affirmed MedQuest Inc.'s $80 million senior secured revolving credit facility due 2007 at B1, $180 million 11 7/8% senior subordinated notes due 2012 at B3 and senior implied rating at B1 and MQ Associates' $85 million senior discount notes due 2012 at Caa1.

Moody's said the ratings reflect the company's increasing leverage profile, the competitive nature of the diagnostic imaging business, the significant number of physician group practices employing imaging machines and the potential for lost scan volume of MedQuest, the potential for continued pricing pressure of scans due to competition, concerns about industry over-utilization of diagnostic imaging and the potential for volume reductions going forward, the tight technician market and the overall increasing labor cost trends, the potential for lost management focus after a significant payout on their equity and the limited debt repayment ability of the company due to weak free cash flows.

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