Research Update: Germany-Based Health Care Company GHD Downgraded To 'B-' From 'B' On Operating Underperformance; Outlook Stable

GHD's 2019 results were below expectations, with revenue of €574 million, amid continued stiff regional- and therapy-specific pressures from competitors. This has led to a lower than expected free operating cash flow (FOCF) as both inventories and receivables have increased substantially over the past year. We are therefore lowering our issuer credit ratings to 'B-' from 'B'. The recovery rating on the company's senior secured debt remains at '4'. The stable outlook reflects our view that GHD will post limited EBITDA growth, given the increasingly competitive environment it operates in. Furthermore, we believe that the company's working capital efficiency measures will allow GHD to improve its liquidity position and generate slightly positive FOCF in 2020. The stable outlook reflects our

...- GHD's 2019 results were below expectations, with revenue of 574 million, amid continued stiff regional- and therapy-specific pressures from competitors. - This has led to a lower than expected free operating cash flow (FOCF) as both inventories and receivables have increased substantially over the past year. - We are therefore lowering our issuer credit ratings to 'B-' from 'B'. The recovery rating on the company's senior secured debt remains at '4'. - The stable outlook reflects our view that GHD will post limited EBITDA growth, given the increasingly competitive environment it operates in. Furthermore, we believe that the company's working capital efficiency measures will allow GHD to improve its liquidity position and generate slightly positive FOCF in 2020....

Research Update