Moody's downgraded AAC Holdings Inc.'s probability of default rating to D-PD from Caa2-PD, citing the healthcare facilities operator's missed debt payment.

The rating agency affirmed the company's Caa2 Corporate Family Rating and the Caa2 ratings on AAC's senior secured credit facilities. The outlook remains negative.

Moody's said the downgrade was the result of AAC's failure to pay the principal and interest due Sept. 30, which the rating agency considered a default.

According to Moody's, the negative outlook reflects the risk that AAC will be unable to improve its operating performance and weak liquidity in the near term.

Meanwhile, the affirmations reflect AAC's potential for future defaults within the next 12-24 months due to the company's "very high" financial leverage. The rating agency believes the company's real estate portfolio will support the recovery prospects for its senior secured debtholders in a default scenario.

On Nov. 26, S&P Global Ratings downgraded the company's issuer credit rating to selective default from CCC, also due to a missed debt payment.

Brentwood, Tenn.-based AAC Holdings operates facilities that provide substance abuse treatment services for individuals with drug and alcohol addiction.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.