Team Health affirmed at Caa1 by Moody's on partly extended term loan maturities

Team Health Holdings Inc.'s corporate family rating was affirmed by Moody's on March 1 at Caa1, with the agency citing continued refinancing risk beginning in early 2024 despite recent maturity amendments to some of Team's secured debt. The company's term loan and revolver were also affirmed, at B3, while its 6.375% unsecured notes due February 2025 were affirmed at Caa3. The company's outlook was revised to stable, from rating under review.

In February, Team amended the maturity of a portion of its senior secured term loan to February 2027, from February 2024. But the agency pointed out that "under certain conditions" the maturity on the amended debt can spring forward to November 2024, placing it ahead of the February 2025 maturity of Team's unsecured notes.

Moody's said that "it is unlikely" that banks will extend the revolver, which currently matures in November 2023, beyond the 2024 maturity of the term loan portion that had not been amended. The result is that "the risk of the company's entire debt capital structure coming due starting in early 2024 through early 2025 remains a material credit risk," according to Moody's.

Moody's said that Team's leverage should remain in the low-to-mid-7x area over the next year to 18 months. The agency considers liquidity to be "good," with a projection of $100 million-$120 million in free cash flow over the next year, along with roughly $512 million in cash and around $287 million in revolver availability at Dec. 31, 2021 (before accounting for $172 million to be used for debt paydown in 2022's first quarter).

Team Health is a provider of healthcare-professional staffing and administrative services. It is backed by private equity firm Blackstone Group.