Moody’s upgrades New Mountain’s Premier Dental

  • Daniel Crowley named executive chairman in July
  • New Mountain invested in the company in 2012
  • Moody’s hikes view of oral health care provider

Premier Dental Services Inc has gained traction despite lower healthcare reimbursements after the New-Mountain-backed company brought in a new executive over the summer, Moody’s Investors Service said.

The debt-research firm recently upgraded its outlook for Premier Dental Services to positive from negative to reflect “recently improved operating and financial performance attributable to the successful execution of strategic initiatives implemented by the company’s new management team,” analyst Daniel Goncalves said in a note.

Moody’s may upgrade the company’s corporate debt beyond its current Caa1 if it expects operating performance improvement to appear sustainable, including adjusted debt below 6x EBITDA over the next few quarters, Goncalves said. A ‘C’ rating means the company is currently highly vulnerable to non-payment, according to Moody’s definitions.

Premier Dental Services, parent of operating company Western Dental Services, in July named Daniel Crowley executive chairman of the operator of 220 affiliated orthodontic and specialty dental clinics in California, Arizona, Nevada, Texas and Colorado.

Crowley, CEO of a consulting and investment firm, Dynamic Health Solutions, previously led the growth of Foundation Health, then known as Americare, from a small regional plan to a Fortune 500 company.

Moody’s said the company recently reduced capital expenditures to build new dental centers in order to improve operating margins and cash flow. The company’s introduction of third-party patient financing may also reduce bad-debt expense.

Premier increased in-patient revenue-per-visit by focusing on higher margin procedures including orthodontics, Moody’s said.

Moody’s had cut its rating on $325 million of rated credit facilities for Premier in May 2015. The company faced lower average reimbursement rates for its services in California, a key region for its operations.

New York-based New Mountain Capital acquired Western Dental in 2012 after first approaching the company in 2011. It’s one of 19 current portfolio companies listed on the firm’s website.

Action Item: Western Dental:

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