S&P rates Civitas Solutions CCR B+

Standard & Poor's assigned its B+ corporate credit rating to home and community based-health and human services provider Civitas Solutions Inc. on Jan. 29. The outlook is positive.

In conjunction with this rating action, S&P withdrew its B+ corporate credit rating National Mentor Holdings Inc.

At the same time, S&P affirmed its B+ issue-level rating on National Mentor Holdings' senior secured credit facility. The recovery rating on this debt remains 3, indicating expectations for meaningful (50% to 70%; at the high end of the range) recovery in the event of a payment default.

S&P’s positive outlook on Civitas is based on outperformance relative to the agency’s previous 2015 base-case projections, and potential for a higher rating if Civitas meets base-case projections through 2016 and if the increasing public ownership of the company results in a less aggressive financial policy.

Civitas' operating performance over the past several quarters, as measured by margins, has been stronger than our expectations, due to lower labor and insurance costs.

“Our positive outlook on Civitas Solutions reflects our view that improving EBITDA margins in 2016 and 2017 will sustain leverage below 4x,” said S&P credit analyst James Uko in a news release.

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