TEXT-S&P: Universal Health Services rating unaffected by loan increase
Sept 24 - Standard & Poor's Ratings Services today said that its ratings on King of Prussia, Penn.-based health care service provider Universal Health Services Inc. is unaffected by the upsizing of the recently rated term loan A-2. Universal increased the size of the term loan to $900 million from the proposed amount of $500 million. The company used all of the additional $400 million proceeds to repay outstanding term loan B, resulting in no change in senior secured debt outstanding. Our rating on the loan is 'BB+', with a recovery rating of '2', indicating our expectation of substantial (70% to 90%) recovery for lenders in the event of default. Our corporate credit rating on Universal is 'BB', and the rating outlook is stable. Our assessment of the company's business risk profile as "fair" reflects the company's increasing market presence and high margins in its rapidly growing inpatient behavioral business, which somewhat eases the reimbursement risks associated with its less profitable acute care business segment. We consider the financial risk profile "significant," reflecting our expectation that leverage will remain in the low-3x area, and that the company will continue to follow a relatively modest growth strategy. Universal is an owner and operator of acute care hospitals, behavioral health hospitals, and ambulatory centers nationwide and in Puerto Rico and the U.S. Virgin Islands. RELATED CRITERIA AND RESEARCH -- Methodology: Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012 -- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011 -- Standard & Poor's Revises Its Approach To Rating Speculative-Grade Credits, May 13, 2008 -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008 -- 2008 Corporate Criteria: Rating Each Issue, April 15, 2008 -- 2008 Corporate Criteria: Ratios And Adjustments, April 15, 2008 RATINGS LIST Ratings Affirmed Universal Health Services Inc. Corporate Credit Rating BB/Stable/-- New Ratings Universal Health Services Inc. Senior Secured $900M term loan A-2 due 2016 BB+ Recovery Rating 2 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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