|[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
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:
Catalent Pharma Solutions Inc.
Community Health Systems Inc.
DaVita HealthCare Partners Inc.
Emdeon (News - Alert) Inc.
Endo Health Solutions Inc.
Envision Healthcare Corp.
HCA Holdings Inc.
IASIS Healthcare LLC
Kindred Healthcare Inc.
Kinetic Concepts Inc.
LifePoint Hospitals, 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
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
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