Moody’s rates New Millennium CFR, loan Caa2

Moody's Investors Service said it assigned a Caa2 corporate family rating and Caa2-PD probability of default rating to New Millennium HoldCo, Inc., the parent of Millennium Health, LLC.

At the same time, the agency assigned a Caa2 (LGD 3) rating to the company's first-lien senior secured term loan. New Millennium and Millennium Health are co-borrowers under the new credit agreement.

The outlook is stable.

Moody’s said the Caa2 corporate family rating reflects its expectation that the company will remain highly levered for the foreseeable future.

The agency estimates that adjusted debt to EBITDA for the 12 months ended March 31, 2016 was 5 times, and expects that leverage will reach a high of over 7 times by the end of 2016. This increase in leverage is largely due to deterioration in Millenium's earnings following a reduction in Medicare billing rates for diagnostic testing that began on Jan. 1, 2016.

The impact is a net reimbursement reduction for Millennium and other lab companies, Moody’s said.

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