TEXT-S&P may raise Metropolitan Health Networks rating

Tue Nov 6, 2012 11:49am EST

-- Boca Raton, Fla.-based Metropolitan Health Networks Inc. (NYSE: MDF) 
announced today that it had entered into a definitive agreement to be acquired 
by Louisville, Ky.-based Humana Inc. (NYSR: HUM) for about $850 million.
     -- As a result, we are placing our 'B+' counterparty credit rating on MDF 
on CreditWatch with positive implications.
     -- At the same time, we are placing our 'BB-' senior secured debt rating 
on the company's first-lien term loan and revolver and the 'B-' senior secured 
debt rating on its second-lien term loan on CreditWatch with positive 
implications.
     -- We will likely upgrade the ratings once the deal closes, which we 
expect by the end of the first-quarter 2013.

NEW YORK (Standard & Poor's) Nov. 6, 2012--Standard & Poor's Ratings Services 
said today that it has placed its 'B+' counterparty credit rating on 
Metropolitan Health Networks Inc. (MDF) on CreditWatch with positive 
implications. At the same time, we placed our 'BB-' senior secured debt rating 
on the company's first-lien term loan and revolver and the 'B-' senior secured 
debt rating on its second-lien term loan on CreditWatch with positive 
implications.

"The CreditWatch placement reflects MDF's anticipated acquisition by a 
higher-rated entity, Humana Inc. (BBB/Positive/--), which will likely result 
in a three-notch or greater upgrade once the deal closes, depending on our 
application of our group methodology criteria," said Standard & Poor's credit 
analyst Neal Freedman. "We generally view acquisitions as no more than 
strategically important, rather than core, within a new organization at least 
during the first year or two after the acquired company is operating in the 
group."

We will likely upgrade the rating upon deal closing, which we expect by the 
end of first-quarter 2013. In the meantime, we will continue to monitor MDF's 
financial condition, as well as discuss MDF's strategic group status with 
Humana's management team.
 

RELATED CRITERIA AND RESEARCH
Group Methodology, April 22, 2009
 

RATINGS LIST

CreditWatch Action
                                        To                    From
Metropolitan Health Networks Inc.
 Counterparty Credit Rating             B+/Watch Positive     B+/Stable

CreditWatch Action; Recovery Ratings Unchanged
                                        To                    From
Metropolitan Health Networks Inc.
 Sr sec 1st-lien term loan              BB-/Watch Positive    BB-
  Recovery Rating                       2
 Sr sec 2nd-lien ln                     B-/Watch Positive     B-
  Recovery Rating                       6
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