Research Update: Vyaire Medical Inc. Liquidity Profile Revised To Less Than Adequate On Limited Revolver Availability; Ratings Affirmed

In fiscal 2019, multiple operational disruptions resulted in Vyaire Medical Inc.'s free cash flow deficit of about $180 million in the first nine months of 2019. This was partially financed by $150 million of equity support from its owners, an increased revolver draw, and the issuance of new debt. Given the increased usage of the revolver, the company's liquidity position has deteriorated. As of Sept. 30, 2019, we estimate that its liquidity sources for the next 12 months will be just enough to cover expected uses, with limited cushion. We also forecast that, absent materially improved performance, Vyaire may have only minimal covenant cushion over the next few quarters. Thus, we are revising our liquidity assessment to less than adequate

...- In fiscal 2019, multiple operational disruptions resulted in Vyaire Medical Inc.'s free cash flow deficit of about $180 million in the first nine months of 2019. This was partially financed by $150 million of equity support from its owners, an increased revolver draw, and the issuance of new debt. - Given the increased usage of the revolver, the company's liquidity position has deteriorated. As of Sept. 30, 2019, we estimate that its liquidity sources for the next 12 months will be just enough to cover expected uses, with limited cushion. We also forecast that, absent materially improved performance, Vyaire may have only minimal covenant cushion over the next few quarters. Thus, we are revising our liquidity assessment to less than adequate from adequate. - At the same time, our base case assumes that the steps the company has undertaken in 2019 to address operational difficulties should improve its margin profile and reduce adjusted leverage to below 10x in 2020. - We are affirming our...

Research Update