Moody’s slices Careismatic

Moody's Investors Service said it downgraded New Trojan Parent, Inc.'s (Careismatic Brands) ratings including its corporate family rating to Caa3 from Caa1 and probability of default rating to Caa3-PD from Caa1-PD. The agency also lowered the ratings on its bank credit facilities, which includes its backed senior secured revolving credit facility and backed senior secured first-lien term loan B to Caa3 from Caa1 and cut its backed senior secured second-lien term loan to C from Caa3.

“The downgrade reflects the deterioration in Careismatic's operating performance, cash flow and credit metrics, particularly its very high leverage. While the company had originally anticipated stabilization in fiscal 2023, Careismatic's sales have continued to be negatively impacted by intense competition, changes in customer buying patterns and a softening of demand for medical scrubs from its pandemic-driven peak.

“Coupled with earnings weakness, Moody's-adjusted leverage has increased to 14x for the LTM period ended June 2023 from approximately 10.8x at year-end 2022 because of the closing of a new $30 million accounts receivable financing facility ($15 million drawn) and $40 million of operating leases associated with a new distribution center. We anticipate that material performance improvement is unlikely through the first half of 2024,” the agency said in a statement.

The outlook remains negative.

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