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TMCNet:  Fitch Publishes Second Edition of 'High Yield Healthcare Checkup'

[April 04, 2014]

Fitch Publishes Second Edition of 'High Yield Healthcare Checkup'

NEW YORK --(Business Wire)--

Fitch Ratings today published the second edition of its 'High Yield Healthcare Checkup' a comprehensive analysis of large companies in the leveraged finance healthcare sector.

The report profiles 24 high yield healthcare companies with a cumulative $126 billion of debt in the provider, services, specialty pharmaceutical, medical device and diagnostic sub-sectors. Each company report includes Fitch's analysis of the business profile and capital structure, as well as key selected financial data, a detailed organizational chart, and debt covenant analyses.

The healthcare industry faces recurrent challenges in 2014. Consumers and health insurers maintain a sharp focus on controlling spending, contributing to weak growth in the developed markets for healthcare products and services. However, Fitch believes that the industry will maintain a decent level of financial flexibility despite secular challenges, with strong growth in emerging markets, the implementation of the Affordable Care Act (ACA) and favorable demographic trends supporting topline growth.

In-line with this expectation, Fitch finds that liquidity profiles of high yield healthcare companies are relatively solid. Most companies in the group are generating cash in excess of reinvestment requirements and debt maturity schedules are not a significant risk to credit profiles. Companies have recently been proactive in extending maturity schedules through bank loan amendments and high-yield bond issuance and many are benefiting from lower cash interest expense and more lenient bank covenant terms post refinancing.

Several companies in the group have large 2016 debt maturities; Fitch thinks companies with near-term maturities will have market access to refinance these obligations. Encouraged by the themes supporting the industry's favorable long-term growth prospects, Fitch expects capital markets to maintain an accommodative stance toward healthcare issuers in 2014.

Fitch expects a nominal amount of deleveraging in 2014, mainly for those companies that recently completed large acquisitions. The prmary source of deleveraging will be EBITDA growth. Although most companies will have the opportunity to pay down debt with free cash flow, Fitch expects acquisitions will be the top priority for capital deployment. Consolidation is one by-product of various reimbursement pressures and reforms facing the industry, including the ACA.

The following companies are profiled in the report:

Alere Inc.

Biomet Inc.

Catalent Pharma Solutions Inc.

Catamaran Corp.

Community Health Systems Inc.

DaVita HealthCare Partners Inc.

Emdeon (News - Alert) Inc.

Endo Health Solutions Inc.

Envision Healthcare Corp.

HCA Holdings Inc.

HealthSouth Corp.

Hologic Inc.

IASIS Healthcare LLC

Kindred Healthcare Inc.

Kinetic Concepts Inc.

LifePoint Hospitals, Inc.

MedAssets Inc.

Omnicare Inc.

Quintiles Transnational Holdings Inc.

Select Medical Holdings Corp.

Tenet Healthcare Corp.

Universal Health Services Inc.

Valeant Pharmaceuticals International Inc.

VWR Funding Inc.

The full report 'High Yield Healthcare Checkup' is available at www.fitchratings.com. Fitch's 2014 outlook report for the U.S. healthcare industry is also available.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: High-Yield Healthcare Checkup: Comprehensive Analysis of High-Yield U.S. Healthcare Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=736356

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.


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