Moody's cuts Carestream Dental

Moody's Investors Service said it downgraded Carestream Dental Technology, Inc.'s ratings, including the corporate family rating to Caa2 from B3, the probability of default rating to Caa2-PD from B3-PD, the company's senior secured first-lien revolving credit facility and senior secured first-lien term loans to Caa1 from B2 and the senior secured second-lien term loans to Caa3 from Caa2.

“The ratings downgrade reflects increasing refinancing risk due to upcoming maturities and a deterioration in operating performance. Lower sales and persistent inflationary cost pressures are negatively impacting the company's earnings. Moody's expects that revenue recovery will be slow, as continued macro headwinds and high-interest rates reduce the pace of new orders of imaging equipment from dentists, particularly for high-dollar CBCT machines,” the agency said in a statement.

Moody's said it estimates Carestream Dental's debt to EBITDA to be in the high 7x range as of June 30 and forecasts leverage to remain elevated over the next 12 to 18 months, despite expectations of a modest earnings rebound into 2024.

“The first lien term loans mature in September 2024 and the revolving credit facility expires in June 2024. Moody's believes that the company's weak operating performance and difficult refinancing conditions will challenge the company's ability to address its refinancing needs,” the agency said.

The outlook is stable.

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