S&P revises Zest view to stable

S&P said it revised the outlook for Zest Acquisition Corp. to stable from negative.

“Our outlook revision reflects our view that the risk from the recent patent expiration of Zest's main product, Locator, will be less pronounced than anticipated. Moreover, most of the recent customer-related challenges are resolved. Through the first nine months of 2019, Zest's operating performance was good, in line with our previous base-case projection: mid-single-digit percent revenue growth, high EBITDA margins above 50%, last-12-months leverage as of Sept. 30, 2019, at 7.4x, and FOCF of $22 million,” said S&P in a press release.

S&P revised its 2020 revenue and EBITDA projections, resulting in expected leverage at 7x and stable annual cash flow generation in excess of $15 million. Revenue growth is supported by continued demand for the Locator products because of their effectiveness and dentist loyalty.

The agency also affirmed the B ratings on Zest and its first-lien debt at B and CCC+ rating on its second-lien debt. The respective recovery ratings remain 3 and 6.

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