Moody’s: Surgery Center facilities B1, notes Caa2

Moody's Investors Service said it assigned B1 ratings to Surgery Center Holdings, Inc.'s (doing business as Surgery Partners) senior secured revolving credit facility and term loan.

The agency also assigned a Caa2 rating to Surgery Partners' new senior unsecured notes.

At the same time, Moody's affirmed Surgery Partners' B3 corporate family rating, B3-PD probability of default rating, Caa2 rating on its existing senior unsecured notes and SGL-2 speculative grade liquidity rating.

The outlook was changed to stable from developing.

Moody’s said the outlook change reflects its view that Surgery Partners' acquisition of National Surgical Hospitals, Inc. (NSH, B2 under review for downgrade) will be only modestly leveraging. It also incorporates the agency’s belief that Surgery Partners will grow its pro forma revenue by 7-8% per annum and remain free cash flow positive while it integrates National Surgical.

Pro forma for the National Surgical acquisition, adjusted debt to EBITDA is roughly 7 times assuming some cost synergies.

"We expect Surgery Partners' financial leverage to remain high in the mid 6.0 times range as the company focuses its efforts on integrating NSH," Moody's vice president, senior analyst Jonathan Kanarek said in a news release.

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