Moody’s turns Gastro outlook to negative

Moody's Investors Service said it revised the outlook for Gastro Health (Omers Relief Acquisition, LLC) to negative from stable and affirmed the company's B3 corporate family rating and B3-PD probability of default rating. Moody's also affirmed the B2 ratings on the senior secured first-lien credit facilities and the Caa2 rating on the second-lien credit facility.

“The revision of the outlook to negative reflects very high leverage at close to 8x in the twelve months ended March 31, 2023, and a deterioration in financial flexibility due to negative free cash flow and lower cash balances. Moody's expect the company's earnings will improve in 2023 reflecting ongoing expansion and management's focus on execution following a period of acquisitions.

However, a material amount of add-backs to adjusted EBITDA persists, which poses heightened uncertainty around the true underlying cash-generating ability of the company. Failure to improve cash EBITDA in 2023 will result in negative rating pressure,” the agency said in a press release.

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