Moody’s cuts Aegis Toxicology, loan

Moody's Investors Service said it downgraded Aegis Toxicology Sciences Corp.’s corporate family rating to B3 from B2, probability of default rating to B3-PD from B2-PD and second-lien senior secured term loan rating to Caa2 from Caa1

The first-lien senior secured facility was affirmed at B1.

The outlook is stable.

Moody’s said the downgrade reflects its belief that leverage will remain very high over the next year.

“Reduction in the company's EBITDA and cash flow resulting from changes in reimbursement that took effect in 2016 for toxicology lab services will limit Aegis' ability to meaningfully repay debt over the near-term,” the agency said in a news release.

The stable outlook incorporates Moody's expectation that while Aegis will remain highly levered, metrics will gradually improve in the coming year as the company will benefit from an increase in Medicare reimbursement rates for diagnostic testing.

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