Moody's changes Amneal outlook to positive

Moody's Investors Service said it changed Amneal Pharmaceuticals LLC’s outlook to positive from stable and affirmed its corporate family rating at B2, probability of default rating at B2-PD and $493 million term loan at B2 (LGD4).

The agency noted that the term loan includes a proposed incremental $80 million, the proceeds of which will be used to repay existing debt and for other general corporate purposes.

The change in outlook reflects Amneal's very strong recent performance and Moody's expectation that its strong pipeline of new products and heavy investment in research and development and manufacturing capabilities will drive longer-term growth and strengthen its competitive position.

The agency said the B2 corporate family rating reflects Amneal's modest scale in the highly competitive generic pharmaceutical industry and is constrained by risks related to the very rapid growth and the limited cash flow expected over the next couple of years due to high expansion-related capital expenditures and Amneal's high tax distributions. The rating is also constrained by the expectation that the company will pay dividends to shareholders in the future, which may result in increased leverage, Moody’s said.

The ratings are supported by Amneal's significant manufacturing capacity in the United States and India, its diverse dosage-form development and manufacturing capabilities and its proven ability to launch and supply difficult-to-manufacture products, Moody’s said.

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