S&P pares P&L Development

S&P said it lowered its ratings on P&L Development Holdings LLC and its senior secured notes to CCC+ from B-.

“We forecast materially weaker EBITDA in 2022, which puts a strain on the company's credit metrics,” S&P said in a press release.

The agency also noted the issuer confronts extraordinary inflationary for its raw materials, including active ingredients and packaging, and labor and freight costs.

A history of operational missteps, negative free operating cash flow (FOCF), and low margins also underpin the ratings. The company missed our expectations in 2019 and 2020 because of delayed regulatory approval of certain Abbreviated New Drug Applications, longer-than-expected retailer due diligence on its nicotine replacement products, and supply chain disruptions in the early stages of the pandemic. These disruptions continued into 2021, exacerbated by a weak cough, cold and flu season, followed by a social reset that led to unprecedented demand dynamics and an inability to fully realize sales opportunities as the supply chain could not support the surge,” S&P said.

The outlook is negative.

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