Moody's moves Axplora view to negative

Moody's Investors Service said it changed the outlook on European Medco Development 3 Sarl (Axplora) to negative from stable. Concurrently, the agency affirmed Axplora's B2 long-term corporate family rating and B2-PD probability of default rating as well as the B2 rating on European Medco Development 4 Sarl’s senior secured bank credit facilities.

“The negative outlook reflects expectations for a prolonged recovery following Axplora's earnings miss for its financial year ending March 2023. Furthermore, higher costs such as labor, R&D and SG&A, together with continued depressed levels of CDMO sales and recurring EBITDA, will in Moody's view lead to weak credit metrics for the year ending March 2024 as well.

“Nevertheless, Moody's sees a potential recovery for the year ending March 2025, supported by the sales of new molecules, resurrecting sales from currently overstocked customers and benefits from cost-savings initiatives, which could result in Moody's-adjusted metrics returning to levels commensurate with the B2 CFR. Furthermore, with adequate liquidity and the absence of any meaningful maturity prior to November 2026, Axplora has time to show improvement prior to approaching the debt markets,” the agency said in a press release.

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