Moody's might downgrade Select Medical

Moody's Investors Service said it placed the ratings of Select Medical Holdings Corp. and Select Medical Corp. under review for downgrade, including Select Medical Holdings’ B1 corporate family rating and B1-PD probability of default rating and Select Medical Corp.’s Ba2 (LGD2) senior secured credit facilities and B3 (LGD5) senior notes.

The review follows the announcement that Select will enter into a joint venture with Welsh, Carson, Anderson & Stowe to acquire Concentra Inc. for $1.06 billion.

Moody's estimates that the transaction will significantly increase Select's leverage when taking into account the funding and the consolidation of the proposed joint venture.

The agency said its review will focus on the impact on Select's leverage and liquidity from the funding of the joint venture's acquisition of Concentra as well as the structure of the transaction and its effect on Select's credit metrics and existing creditors.

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