Research Update: Aegis Toxicology Sciences Corp. Downgraded To 'B-' On Accounts Receivable Write-Off, Off Watch; Outlook Stable

U.S.-based toxicology laboratory services provider Aegis Toxicology Sciences Corp. restated its financial statements from 2016-2018 to reflect large accounts receivable write-offs. Pro forma for the restatement, leverage is above 6x, and we expect lower EBITDA and cash flow, relative to our prior projections. We are lowering our long-term issuer credit rating to 'B-' from 'B' and lowering our senior secured issue-level rating to 'B-' from 'B'. We are removing the ratings from CreditWatch, where we placed them with negative implications on June 3, 2019. The stable outlook reflects our belief that the company has resolved its billing issues, which should allow for marginally positive free cash flow generation over the next two years. Aegis had a significant problem with its

...- U.S.-based toxicology laboratory services provider Aegis Toxicology Sciences Corp. restated its financial statements from 2016-2018 to reflect large accounts receivable write-offs. - Pro forma for the restatement, leverage is above 6x, and we expect lower EBITDA and cash flow, relative to our prior projections. - We are lowering our long-term issuer credit rating to 'B-' from 'B' and lowering our senior secured issue-level rating to 'B-' from 'B'. We are removing the ratings from CreditWatch, where we placed them with negative implications on June 3, 2019. - The stable outlook reflects our belief that the company has resolved its billing issues, which should allow for marginally positive free cash flow generation over the next two years....

Research Update