Moody's trims Emergent BioSolutions

Moody's Investors Service said it downgraded the ratings of Emergent BioSolutions Inc. including the corporate family rating to B3 from B2, the probability of default rating to B3-PD from B2-PD and the senior unsecured rating to Caa2 from Caa1. The speculative grade liquidity rating remains unchanged at SGL-4.

“The ratings downgrade reflects execution challenges over the next 12 to 18 months related to reversing the operating losses in the CDMO business, managing potential volatility in U.S. government procurement patterns, and successfully commercializing an over-the-counter version of nasal naloxone. These dynamics are likely to constrain earnings to a level below Moody's prior expectations.

“Although the company's capital structure is subject to change due to pending refinancing and asset sale proceeds, Moody's anticipates gross debt/EBITDA ranging from 6x to 8x over the next 12 to 18 months. Emergent's net debt/EBITDA is likely to be substantially lower, but cash levels will primarily support periods of cash flow burn over the next 12 to 18 months,” the agency said in a statement.

The outlook remains negative.

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