Moody's downgrades MediMedia

Moody's Investors Service said it downgraded MediMedia USA, Inc.'s corporate family and probability of default ratings to B3 from B2, senior secured bank credit facility to B1 from Ba3 and senior subordinated notes to Caa2 from Caa1.

The outlook was changed to stable from negative.

The agency said the downgrade reflects the lack of organic growth, which has contributed to a thin cushion of compliance with bank financial covenants and high leverage (approximately 5.8 times for the trailing 12 months through March 31). In addition, Moody's said that given MediMedia's reliance on pharmaceutical sector marketing spend for a significant portion of its revenue, the projected increase in patent expiries and downward trends in pipeline quality raise concerns about MediMedia's longer-term growth prospects.

MediMedia's established client relationships with high renewal rates, its strong credibility with pharmaceutical marketers and a degree of revenue stability from long-term contracts support the ratings, the agency added.

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