Research Update: Heartland Dental LLC Upgraded To 'B-' On Stronger-Than-Expected Earnings Growth, Outlook Stable

Heartland Dental LLC's recent operating trends have been better than we expected, including three consecutive quarters of strong revenue and EBITDA growth. We expect the company to more than double its adjusted EBITDA (relative to its 2020 results) over the next couple of years on its continued expansion, an improvement in its EBITDA margin, and contributions from its acquisitions. This is a material increase from our previous forecast, which contributes to our expectation for lower debt leverage even after incorporating Heartland's proposed $660 million incremental term loan issuance. We believe the company intends to use the proceeds from the $660 million incremental term loan primarily to fund its acquisition of American Dental Partners Inc. Therefore, we are raising our issuer

...- Heartland Dental LLC's recent operating trends have been better than we expected, including three consecutive quarters of strong revenue and EBITDA growth. We expect the company to more than double its adjusted EBITDA (relative to its 2020 results) over the next couple of years on its continued expansion, an improvement in its EBITDA margin, and contributions from its acquisitions. This is a material increase from our previous forecast, which contributes to our expectation for lower debt leverage even after incorporating Heartland's proposed $660 million incremental term loan issuance. - We believe the company intends to use the proceeds from the $660 million incremental term loan primarily to fund its acquisition of American Dental Partners Inc. - Therefore, we are raising our issuer credit rating on Heartland Dental to 'B-' from '###+' and our issue-level ratings on its first-lien debt and senior unsecured notes to 'B-' and '###', respectively. - The stable outlook reflects our expectation...

Research Update