Fitch Affirms Ratings of Diagnosticos da America S.A. (DASA)

RIO DE JANEIRO & CHICAGO--(Business Wire)--
Fitch Ratings has affirmed the 'BB' Foreign and Local Currency Issuer Default
Ratings (IDRs) of Diagnosticos da America S.A. (DASA). Fitch has also affirmed
the company's 'A+(bra)' national scale rating and the 'BB' rating of its USD250
million senior unsecured notes due in 2018. The Rating Outlook for DASA is
Stable.

DASA's credit ratings are supported by the company's leading position in the
Brazilian medical diagnostics industry. The ratings of DASA also take into
consideration the company's conservative management of its credit profile,
historically using a mix of debt and equity to fund growth. Further factored
into DASA's ratings are its presence in many segments of the diagnostic
healthcare market and the diversification of its exposure to multiple
counterparties. Considerations that limit DASA's ratings are the rapid
consolidation of the diagnostic industry, the need to manage reputation risk and
the potential for counterparty payment risk to increase during an economic
crisis and currency mismatch risk.

As the leading provider of diagnostic services in Brazil, DASA is able to
provide an array of services not offered by its competitors. Its size and
reputation have enabled it to charge competitive prices versus most of its peers
and to lower per unit diagnostic costs, which benefit its profitability.

DASA generated BRL245 million of EBITDA and BRL414 million of funds from
operations (FFO) during 2008. These figures compare with the BRL179 million of
EBITDA and BRL184 million of FFO in 2007. DASA had a very strong first quarter
of 2009. Its EBITDA during the quarter was BRL77 million, an increase from BRL59
million during the same quarter in 2008. As a result, the company's last 12
months (LTM) EBITDA for the period ended March 31, 2009 was BRL267 million. The
cash flow growth during the past year was due to increased demand for the
company's products, the opening of 17 new patient service centers (PSC) and the
acquisition of three smaller companies.

Free cash flow, defined as cash flow from operations less dividends and capital
expenditures, grew to BRL224 million during the LTM ended March 2009 from BRL205
million during 2008. DASA's free cash flow was a negative BRL56 million during
2006 due to BRL186 million of capital expenditures.

DASA had BRL1.04 billion of total consolidated debt and BRL492 million of cash
and financial applications on Dec. 31, 2008. The company's debt increased from
BRL406 million at the end of 2007 due to the issuance of a USD250 million bond
during May 2008 and the subsequent devaluation of the Brazilian real versus the
U.S. dollar. The company has kept most of the cash from this issuance to improve
liquidity in the face of the current credit crisis. As of March 31, 2009, DASA
had BRL395 million of cash and BRL970 million of debt. The company faces debt
amortizations of BRL210 million during 2009, BRL142 million during 2010 and
2011.

Approximately 72% of DASA's debt is denominated in USD. With all of its revenues
generated in Brazilian reais, the company is exposed to the risk of currency
mismatch. The company has attempted to hedge this risk with swap transactions
that cover its interest payments during the next four years. Out of the total
debt, BRL943 million is at the holding company, which also operates as an
operating company. The remaining BRL27 million of debt is at various
subsidiaries. The debt consists primarily of BRL596 million of senior notes due
2018, BRL133 million of debentures that will continue amortizing through 2011
and BRL120 million of banking debt. The debentures have financial covenants. The
most restrictive are a consolidated net debt/EBITDA lower or equal to 2.5 times
(x) and an EBITDA/net consolidated financial expenses ratio of at least 2.0x.

The outlook for the Brazilian private medical diagnostic industry remains
favorable, despite the challenging scenario in 2009. An improved socio-economic
environment in Brazil during the last few years has increased per capita GDP
levels and has lowered unemployment. These factors have enabled many people to
switch from public healthcare to private healthcare. For 2009, Fitch expects a
1.2% decrease of GDP but forecasts a 3.5% recovery by 2010, which should be
beneficial for DASA's business evolution. The availability of a larger number of
diagnostic tests, as well as an aging population should also support the
increase of sector demand, in the next few years.

In March 2009, DASA's FFO adjusted leverage ratio was 1.8x, while its total
debt/ EBITDA ratio was 3.6x. The company's net debt/ EBITDA remains below
covenant levels at 2.2x. DASA intends to issue equity, if necessary, to maintain
its net debt/EBITDA ratio below 2.5x in case of a significant acquisition. The
uncertainty in the capital market, however, adds risk to the success of
executing an offering of shares.

DASA is the largest private medical diagnostic company in Brazil. As of the end
of 2008, the company operated 328 inpatient and outpatient service centers in
Brazil. Services offered at its PSCs include imaging, clinical analysis and
vaccinations. DASA also offers lab-to-lab services and has entered into
agreements with state and local governments. DASA is 93.5% publicly owned. Board
members and management own the remaining 6.5% of the company.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, 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 Ratings
Debora Jalles, +55-21-4503-2600 (Rio de Janeiro)
Joe Bormann, CFA, +1-312-368-3349 (Chicago)
Media Relations
Brian Bertsch, +1-212-908-0549 (New York)
brian.bertsch@fitchratings.com
Cindy Stoller, +1-212-908-0526 (New York)
cindy.stoller@fitchratings.com

Copyright Business Wire 2009