TEXT - Fitch launches 'high yield healthcare checkup'
(The following statement was released by the rating agency) Link to Fitch Ratings' Report: High-Yield Healthcare Checkup: Comprehensive Analysis of High-Yield U.S. Healthcare Companies here Jan 16 - Fitch Ratings today published its first edition of the 'High Yield Healthcare Checkup' a comprehensive analysis of large companies in the leveraged finance healthcare sector. The report profiles 23 high yield healthcare companies with a cumulative $110 billion of debt in the provider, 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 U.S. healthcare sector is facing a challenging environment in 2013, particularly in the developed markets of the U.S. and Eurozone. Healthcare providers are the most directly exposed to these challenges, including federal deficit reduction measures and potential entitlement reforms in the U.S. All the service providers profiled have exposure to government payors and are facing pricing headwinds to varying degrees. These factors are key determinants of each company's credit profile and are discussed in detail in this report. Against the back-drop of a challenging operating environment, Fitch finds that liquidity profiles are relatively solid. 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. Many companies are also benefiting from lower cash interest expense and more lenient bank covenant terms post refinancing. Fitch expects companies with near-term maturities to be able to refinance the obligations given the presently accommodative stance of lenders and bond investors. Fitch expects a nominal amount of deleveraging in 2013, mainly for those companies that recently completed large acquisitions. The source of deleveraging will be EBITDA growth. Although most companies will have the opportunity to pay down debt with FCF, Fitch expects tuck-in acquisitions will be the top priority for capital deployment. Consolidation is one by-product of various reimbursement pressures and reforms facing the industry, including those required by the Affordable Care Act (ACA). The following companies are profiled in the report: Alere Inc. Biomet, Inc. Catalent Pharma Solutions, Inc. Community Health Systems, Inc. DaVita Healthcare Partners, Inc. Endo Health Solutions Inc. Emergency Medical Services Corp. HCA Holdings Inc. Health Management Associates, Inc. HealthSouth Corp. Hologic, Inc. IASIS Healthcare LLC Kindred Healthcare Inc. LifePoint Hospitals, Inc. Mylan Inc. Omnicare Inc. Select Medical Holdings Corp. Tenet Healthcare Corp. Universal Health Services, Inc. Vanguard Health Systems, Inc. Valeant Pharmaceuticals International Inc. VWR Funding Inc. Warner Chilcott plc The full report 'High Yield Healthcare Checkup' is available at www.fitchratings.com. Fitch's 2013 outlook report for the U.S. healthcare industry is also available. (Caryn Trokie, New York Ratings Unit)
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