Research Update: Child Care Provider Bright Horizons Family Solutions Downgraded To 'B+' As COVID-19 Hurts Performance; Outlook Negative

The impact of the COVID-19 pandemic on U.S.-based child care center operator Bright Horizons Family Solutions LLC will be greater than we previously anticipated, as most of its U.S. centers are closed, and timeframes for reopening are uncertain. We expect the company to seek an amendment for its covenants and to maintain sufficient liquidity in the coming months. Proceeds from the recent $250 million sale of common equity to Durable Capital, announced on April 20, 2020, will enhance liquidity. Credit metrics will significantly weaken this year. We expect leverage will increase to the mid- to high-5x area from 3.4x as of Dec. 31, 2019. Leverage could remain elevated because of uncertainty about centers re-opening and how quickly occupancy rates will

...- The impact of the COVID-19 pandemic on U.S.-based child care center operator Bright Horizons Family Solutions LLC will be greater than we previously anticipated, as most of its U.S. centers are closed, and timeframes for reopening are uncertain. - We expect the company to seek an amendment for its covenants and to maintain sufficient liquidity in the coming months. Proceeds from the recent $250 million sale of common equity to Durable Capital, announced on April 20, 2020, will enhance liquidity. - Credit metrics will significantly weaken this year. We expect leverage will increase to the mid- to high-5x area from 3.4x as of Dec. 31, 2019. Leverage could remain elevated because of uncertainty about centers re-opening and how quickly occupancy rates will improve, especially given a continued economic recession and high unemployment rates. - We are lowering our ratings on Bright Horizons by one notch including the issuer credit rating to 'B+' from '##-'. - The negative outlook reflects the...

Research Update