Moody's rates Heartland Dental loan B2

Moody's Investors Service said it assigned a B2 (LGD 3) rating to Heartland Dental, LLC new $150 million incremental first-lien term loan.

All of the other ratings, including the B3 corporate family rating, B3-PD probability of default rating, B2 senior secured rating and Caa2 unsecured note rating, are unchanged.

The outlook is stable.

The proceeds will be used to add cash to the balance sheet and to fund future acquisitions and new dental offices, the agency said

Moody's said it views the incremental financing as a credit negative as it will increase leverage by about half a turn and delay de-leveraging.

The proposed incremental term loan also signals that Heartland will continue to use debt to fund its future growth, the agency added.

The ratings reflect the company's very high leverage, moderate free cash flow and aggressive growth strategy, Moody's said.

The ratings are supported by the company's position as the largest dental support organization (DSO) in the United States and favorable industry dynamics, the agency said.

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