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Global Credit Research - 05 Aug 2010
Approximately $265 million in newly rated debt
New York, August 05, 2010 -- Moody's Investors Service today downgraded AMN Healthcare, Inc.'s
("AMN") Corporate Family Rating ("CFR") to Ba3 from Ba2.
Concurrently, a Ba2 rating was assigned to the $215 million
first lien credit facility under a proposed amend and extend transaction
that would upsize the existing term loan by $68 million.
A B1 rating was assigned to a new $50 million second lien term
loan. The Ba3 Probability of Default Rating was confirmed and the
ratings outlook is stable. This action concludes the review for
possible downgrade initiated on July 30, 2010.
AMN expects to use proceeds from the $118 million in incremental
debt, along with about $31 million cash on hand and a combination
of preferred and common stock, to finance the previously announced
acquisition of the parent company of Nursefinders, Inc. (dba
Medfinders). The transaction is expected to close in the third
quarter of 2010 and is subject to customary closing conditions,
including regulatory approvals and refinancing.
From an operational standpoint, Moody's views the Medfinders acquisition
positively and anticipates the combination of these two companies will
create a relatively stronger player with greater scale in the healthcare
staffing and managed services market. Nonetheless, an acquisition
of this size creates inherent integration risks and Medfinders'
home healthcare segment is a direct provider of healthcare which,
while complementary to AMN's healthcare staffing services,
has unique regulatory requirements and a different revenue model.
The downgrade in the CFR to Ba3 further reflects an increase in financial
leverage and a reduction in unrestricted cash. Moody's estimates
that adjusted Debt to EBITDA has increased from 4.1 times at June
30, 2010 to about 5.3 times on a pro forma basis for the
acquisition and refinancing. These metrics exclude any potential
synergies and reflect Moody's standard adjustments to capitalize off-balance
sheet operating leases, eliminate certain one-time items
and treat 50% of the preferred stock to be issued in connection
with the acquisition as debt. Excluding the preferred stock adjustment
and assuming no synergies, pro forma leverage is estimated at 4.8
The stable outlook incorporates indications that end market demand is
stabilizing and revenues may have reached the cyclical trough.
Moody's anticipates that credit metrics, currently weak for
the Ba3 rating category, will improve over the near term through
modest volume growth and the realization of potential revenue and cost
For additional information, refer to the Credit Opinion to be posted
Moody's downgraded the following rating:
Corporate Family Rating, to Ba3 from Ba2
Moody's assigned the following ratings:
$40 million proposed first lien revolver due 2014, Ba2 /
$175 million proposed first lien term loan due 2015, Ba2
/ LGD3 (33%)
$50 million proposed second lien term loan due 2016, B1 /
Moody's confirmed the following ratings:
Probability of Default Rating, Ba3
$40 million senior secured revolver due December 2012, Ba1
/ LGD2 (24%) -- to be withdrawn upon closing of the transaction
$107 (previously $110) million senior secured first lien
term loan B due December 2013, Ba1 / LGD2 (24%) -
to be withdrawn upon closing of the transaction
The ratings are subject to Moody's review of final documentation.
The previous rating action on AMN Healthcare occurred on July 30,
2010 when all ratings were placed on review for possible downgrade.
The principal methodology used in rating AMN was Moody's Global Business
& Consumer Service Industry, published in August 2007 and available
on www.moodys.com in the Rating Methodologies sub-directory
under the Research & Ratings tab. Other methodologies and factors
that may have been considered in the process of rating this issuer can
also be found in the Rating Methodologies sub-directory on Moody's
Headquartered in San Diego, California, AMN Healthcare Services,
Inc. is a leading healthcare staffing company in the US.
The company recruits physicians, nurses and allied healthcare professionals
and places them on assignments at acute care hospitals, physician
practice groups and other healthcare settings. For the twelve months
ended June 30, 2010, AMN reported revenues of approximately
$600 million. Medfinders, also a healthcare staffing
company, reported revenues of approximately $300 million
Asst Vice President - Analyst
Corporate Finance Group
Moody's Investors Service
Lenny J. Ajzenman
Senior Vice President
Corporate Finance Group
Moody's Investors Service
Moody's Investors Service
Moody's downgrades AMN Healthcare to Ba3; assigns ratings to new debt
250 Greenwich Street
New York, NY 10007
No Related Data.
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