Research Update: Carestream Health Inc. Rating Lowered To 'B-', Placed On CreditWatch Negative On Upcoming Maturities, Market Hurdles

Carestream Health Inc.'s liquidity position has weakened as it faces significant debt maturities over the next 18 months. We also note that absent refinancing, the company may face covenant pressure stemming from significant step-downs in its financial covenants over 2020. In addition, in 2019 the company's revenue performance was weaker than our previous forecast, especially in the medical digital segment. Although the decline was mainly offset by cost reductions, we now anticipate market headwinds may continue in 2020 and put pressure on the company's plan to improve profitability and cash generation. However, we view the company's leverage of below 5x as sustainable, and believe the progress the company made in cost restructuring combined with debt reduction in 2019 should support

...- Carestream Health Inc.'s liquidity position has weakened as it faces significant debt maturities over the next 18 months. We also note that absent refinancing, the company may face covenant pressure stemming from significant step-downs in its financial covenants over 2020. - In addition, in 2019 the company's revenue performance was weaker than our previous forecast, especially in the medical digital segment. Although the decline was mainly offset by cost reductions, we now anticipate market headwinds may continue in 2020 and put pressure on the company's plan to improve profitability and cash generation. - However, we view the company's leverage of below 5x as sustainable, and believe the progress the company made in cost restructuring combined with debt reduction in 2019 should support its ability to refinance upcoming debt maturities. - We are lowering our issuer credit rating on Carestream to 'B-' from 'B' and placing it on CreditWatch with negative implications. We are also lowering...

Research Update