Moody's slashes Exactech

Moody's Investors Service said it downgraded Exactech, Inc.'s corporate family and first-lien credit facility ratings to Caa2 from B3. The agency also cut the company’s probability of default rating to Caa2-PD from B3-PD.

“The downgrade of Exactech's ratings reflects Moody's expectation of continued cash burn in the next few quarters, weak liquidity and the company's very high financial leverage. Moody's notes that the company consistently spends more on capital expenditures than internally generated cash, resulting in negative free cash flow. With sustained negative free cash flow, the company has been forced to rely on external alternate funding sources (revolver and sale-leaseback transaction) to support its operations,” the agency said in a press release.

Moody’s noted Exactech’s company's debt/EBITDA rocketed to about 14.5x, excluding the effect of foreign-currency depreciation and select other non-recurring expenses) at the end of June from low-6x a year ago.

The outlook remains stable.

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