Research Update: Vyaire Medical Inc. Downgraded To 'CCC+' On Operational Underperformance, Outlook Negative

Mettawa, Ill.-based Vyaire Medical Inc. has underperformed our expectations over fiscal year 2018, primarily due to operating headwinds related to its spin-off process. In addition, the company recently lost a significant contract with one of its customers. The company's free cash flow deficits in fiscal year 2018 significantly outpaced our prior expectations and reached about $113 million, which caused Vyaire to make a significant draw on its revolving facility and increase its leverage. We expect the recent contract loss to materially affect the company's EBITDA and, when combined with the ongoing operational disruptions, lead to continued cash deficits in fiscal year 2019, which will be partially offset by contribution from its recent acquisitions. We are downgrading Vyaire to 'CCC+' from

...+ Mettawa, Ill.-based Vyaire Medical Inc. has underperformed our expectations over fiscal year 2018, primarily due to operating headwinds related to its spin-off process. In addition, the company recently lost a significant contract with one of its customers. + The company's free cash flow deficits in fiscal year 2018 significantly outpaced our prior expectations and reached about $113 million, which caused Vyaire to make a significant draw on its revolving facility and increase its leverage. + We expect the recent contract loss to materially affect the company's EBITDA and, when combined with the ongoing operational disruptions, lead to continued cash deficits in fiscal year 2019, which will be partially offset by contribution from its recent acquisitions. + We are downgrading Vyaire to '###+' from 'B-' and lowering our issue-level rating on its secured first-lien credit facilities to '###+' from 'B-' and our issue-level rating on its second-lien term loan to '###-' from '###'. + The negative...

Research Update