Research Update: Vyaire Medical Inc. Ratings Lowered To 'CCC' On Weak Performance And Tight Liquidity; Outlook Negative

We expect Vyaire Medical Inc. will generate weak profitability and cash flow deficits in fiscal 2022 due to supply-chain disruptions and challenging conditions in the ventilator segment after the tailwinds from COVID-19-related sales subside. We estimate S&P Global Ratings-adjusted leverage of about 10x over the next few quarters. We believe that the company's current liquidity sources may not suffice to cover its needs in the next 12 months. In addition, as the company approaches the final maturity dates of its revolver facilities in January and April 2023, absent significant improvement in the company's operating results, the refinancing risk is elevated. As a result, we lowered our issuer credit rating and our issue-level rating on the first-lien term loan to 'CCC'

...- We expect Vyaire Medical Inc. will generate weak profitability and cash flow deficits in fiscal 2022 due to supply-chain disruptions and challenging conditions in the ventilator segment after the tailwinds from COVID-19-related sales subside. We estimate S&P Global Ratings-adjusted leverage of about 10x over the next few quarters. - We believe that the company's current liquidity sources may not suffice to cover its needs in the next 12 months. In addition, as the company approaches the final maturity dates of its revolver facilities in January and April 2023, absent significant improvement in the company's operating results, the refinancing risk is elevated. - As a result, we lowered our issuer credit rating and our issue-level rating on the first-lien term loan to '###' from '###+'. The recovery rating on the first-lien debt remains '3'. - The negative outlook reflects the potential for another downgrade if Vyaire fails to address its liquidity such that we envision a payment default...

Research Update