Moody's reiterates ratings on HealthSpring
Moody's Investors Service on Friday maintained its ratings on health insurer HealthSpring Inc., citing its integration of Bravo Health and its reduced debt.
Moody's said HealthSpring has successfully integrated Bravo Health, which operates Medicare Advantage plans, after acquiring the company for $545 million in November. It said HealthSpring, based in Nashville, Tenn., has reported strong gains in Medicare Advantage membership and its expansion into Medicaid plans, and it has also repaid a significant amount of its debt. In March, HealthSpring raised $301 million in a stock offering and said it would use at least half that total to repay debt.
However, Medicare Advantage rates are scheduled to be reduced under the 2010 health care reform law, and Moody's said that change will put more pressure on companies that operate the plans. The health care law also has a provision, scheduled to go into effect in 2014, that will require health insurers to spend at least 85 percent of their premium revenue on medical care. Moody's wrote that concerns over the federal budget could lead to further Medicare cuts.
The firm rates HealthSpring's senior secured debt and corporate family ratings at "Ba3." That rating — a non-investment or "junk" grade — is three notches below investment grade. Moody's maintained a "Stable" outlook, meaning it does not expect its view to change in the near future.
Shares of HealthSpring fell 98 cents, or 2.6 percent, to $36.80 in afternoon trading.