S&P affirms Harlan

Standard & Poor's said it affirmed the B corporate credit rating on Harlan Laboratories Inc. and revised the outlook to stable from negative.

"The outlook revision reflects our belief that Harlan's ability to generate cash, combined with undrawn revolver capacity, will provide liquidity to cope with business challenges," S&P analyst Shannan Murphy said in a statement.

In addition, the stable outlook reflects the expectation that, despite the challenging preclinical portion of the contract research organization industry, Harlan will continue to generate positive free cash flow and will remain in compliance with its covenants over the near term, the agency said.

The outlook reflects the belief that the company will be able to maintain a mid- to high-single-digit covenant cushion over the next few quarters by focusing aggressively on costs and margins, S&P added.

Still, visibility into preclinical research revenues remains clouded, and the success of the company's current restructuring is uncertain, and pricing and competitive pressures could pose risks, the agency said.

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