Hanger Orthopedic Group Inc. announced that Moody’s Investors Service has issued an upgrade of all its ratings. The Corporate Family Rating was upgraded to B2 from B3, the senior secured debt was upgraded to Ba3 from B1 and the subordinated notes were upgraded to Caa1 from Caa2. Moody’s also maintained its ratings outlook for Hanger at stable.
In their explanation, Moody’s noted that, “the upgrade in the Corporate Family Rating primarily reflects the improvement in operating performance resulting in improved credit metrics.” Moody’s added, “the stable outlook reflects Moody’s expectation that the company will benefit from a better reimbursement environment in 2007 as the freeze in Medicare reimbursement levels for all orthopedic and prosthetic services ended at the end of 2006. Hanger should be able to maintain its improved credit metrics as a result of stabilization in top-line revenue and cash flow generation.”
“We are pleased with the ratings upgrade by Moody’s for it is recognition that we are continuing to make progress in strengthening our balance sheet and building a stronger financial foundation. Moreover, along with the recent improvement in the outlook from S&P, this upgrade will enable us to generate additional savings in interest expense from our senior debt,” said George McHenry, Hanger’s chief financial officer.