Research Update: Germany-Based Health Care Company GHD Outlook Revised To Negative On Operating Underperformance; 'B' Rating Affirmed

GHD Verwaltung GesundHeits GmbH Deutschland, a Germany-based distributor of medicine and medical products, has been posting operating performances below our expectations. The company is facing a challenging operating environment and has to adjust its business model to mitigate the impact of adverse regulatory changes. This led to a more sizable cash outflow in 2017 than we expected, mainly due to the buildup of receivables and other one-off payments. We are therefore revising our outlook on GHD to negative from stable. At the same time, we are affirming our 'B' issuer credit rating on GHD and our 'B' issue ratings on its secured debt. The negative outlook reflects our view that, in the highly competitive and working-capital-intensive wholesale and distribution industry,

...+ GHD Verwaltung GesundHeits GmbH Deutschland, a Germany-based distributor of medicine and medical products, has been posting operating performances below our expectations. + The company is facing a challenging operating environment and has to adjust its business model to mitigate the impact of adverse regulatory changes. This led to a more sizable cash outflow in 2017 than we expected, mainly due to the buildup of receivables and other one-off payments. + We are therefore revising our outlook on GHD to negative from stable. At the same time, we are affirming our 'B' issuer credit rating on GHD and our 'B' issue ratings on its secured debt. + The negative outlook reflects our view that, in the highly competitive and working-capital-intensive wholesale and distribution industry, GHD might not be able to achieve a sufficient increase in EBITDA and reduction in working capital to be able to generate meaningful free operating cash flow....

Research Update