Moody’s rates Aveanna loan B2

Moody's Investors Service said it confirmed the B3 corporate family rating and B3-PD probability of default rating for Aveanna Healthcare LLC (formerly BCPE Eagle Buyer, LLC).

The agency also confirmed the B2 rating of the existing senior secured first-lien credit facilities, and the Caa2 rating of the senior secured second-lien term loan.

At the same time, Moody's assigned a B2 rating to Aveanna's proposed senior secured delayed-draw term loan due 2024.

The outlook was changed to negative from rating under review.

This concludes the review initiated on May 11 following Aveanna's announcement that it entered into an agreement to acquire Premier Healthcare Services, LLC.

Proceeds from the incremental term loan (and potentially delayed-draw term loan) will be used to acquire Premier Healthcare.

"The negative outlook reflects ongoing weak financial performance, driven in large part by difficulty in integrating the merger of Epic Health Services and PSA Healthcare, as well as the challenging reimbursement environment which has adversely impacted Aveanna's Texas therapy business, in particular," Vladimir Ronin, Moody's lead analyst for the company, said in a news release.

"There are also significant business and integration-related costs and analytic adjustments that render earnings to be lower quality than anticipated, although these are expected to decline materially over the next 12-18 months."

Moody's said it expects financial leverage to remain very high, rather than decline as originally anticipated at the time of the merger of PSA and Epic. Additionally, the agency noted that it expects Aveanna's cash flow profile to be more constrained than initially contemplated.

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