Moody's lowers AAC view to negative

Moody's Investors Service said it affirmed the ratings of AAC Holdings, Inc., parent company of American Addiction Centers, Inc., including the B3 corporate family and B3-PD probability of default rating.

Moody's also said it changed the outlook to negative from stable.

The outlook revision follows news that AAC will acquire AdCare, Inc., a provider of inpatient and outpatient addiction treatment services in the Northeastern United States, for $85 million, the agency explained.

The acquisition will be largely debt funded, Moody's noted.

The ratings acknowledge the strategic value of AdCare, which will increase AAC's scale, and diversity by payor and geography, the agency said.

It also provides AAC with a platform to treat Medicare and Medicaid patients, Moody's said.

The negative outlook reflects the heightened execution and financial risk associated with a sizable debt-funded acquisition, the agency said.

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