Moody’s ups Owens & Minor

Moody’s Investors Service said it upgraded the ratings of Owens & Minor, Inc., including its corporate family rating to B2 from B3 and its probability of default rating to B2-PD from B3-PD. Moody’s also upgraded the rating on the senior secured credit facilities and notes to B2 from B3. Moody’s upgraded the speculative grade liquidity rating to SGL-2 from SGL-3, signifying good liquidity. The rating agency also changed the outlook to positive from stable.

“The upgrade of the CFR reflects a material reduction in Owens & Minor’s leverage to 5.7x (vs. 6.3x LTM 6/20) following the recent equity issuance and expectation that the company will apply the net proceeds of at least $140 million to repay debt. The upgrade is also supported by the ongoing improvement in Owens & Minor’s operating performance due to strong demand for the company’s manufacturing business, which produces personal protective equipment (PPE) used to prevent the transmission of coronavirus. The profit margins of this business are higher than those in the distribution business, which is slowly improving,” Moody’s said in a press release.

The speculative grade liquidity rating upgrade reflects the improved free cash flow outlook due to earnings growth, and improved covenant cushion due to debt repayment, the agency said.

The positive outlook reflects the company’s strong earnings outlook.

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