Research Update: Aegis Toxicology Sciences Corp. Upgraded To 'B' On Strong Operating Performance; Outlook Stable

Continued strong demand for COVID-19 testing amid the delta variant surge and a large new contract have significantly improved Aegis Toxicology Sciences Corp.'s operating performance and cash flow. Aegis has reduced leverage through the combination of much higher EBITDA and voluntary debt repayment. Although S&P Global Ratings expects testing volume to significantly decline as the pandemic subsides, we expect the company will continue to benefit in 2022 from some level of COVID-19 business as well as an expansion of its toxicology testing product manual by extending its relationship with Walgreens. We raised our issuer credit rating to 'B' from 'B-'. The outlook is stable. We also raised our rating on the first-lien term loan to 'B' from 'B-'. The '3'

...- Continued strong demand for COVID-19 testing amid the delta variant surge and a large new contract have significantly improved Aegis Toxicology Sciences Corp.'s operating performance and cash flow. - Aegis has reduced leverage through the combination of much higher EBITDA and voluntary debt repayment. - Although S&P Global Ratings expects testing volume to significantly decline as the pandemic subsides, we expect the company will continue to benefit in 2022 from some level of COVID-19 business as well as an expansion of its toxicology testing product manual by extending its relationship with Walgreens. - We raised our issuer credit rating to 'B' from 'B-'. The outlook is stable. We also raised our rating on the first-lien term loan to 'B' from 'B-'. The '3' recovery rating indicates our expectation for meaningful (50%-70%; rounded estimate: 55%) recovery in the event of a payment default. - Our stable outlook incorporates our expectation of the company's credit profile after a period...

Research Update