S&P downgrades Artivion

S&P said it downgraded Artivion Inc. and its senior secured term loan and revolver to B- from B. The recovery ratings remain 3.

“Despite the increase in its organic revenue, the challenging operating environment has caused Artivion's leverage to remain elevated due to its continued cash flow deficits, which has weakened its metrics below our expectations for the B rating. The company's operating margins and cash flow generation in 2022 were significantly impaired by industrywide challenges (i.e. elevated raw material and freight costs, supply chain disruptions leading to shortages of critical components, and staffing shortages in hospitals that caused procedure delays),” S&P said in a statement.

The agency also noted operational challenges, such as staffing difficulties at its German aortic stent manufacturing facility, the delay of the BioGlue CE Mark, the delay in its receipt of premarket approval (PMA) for its PerClot product and the ensuing payment from Baxter, and the exit of the supplier of the handpieces for its CardioGenesis cardiac laser therapy products, also hurt its results.

“We also expect its free operating cash flow (FOCF) to debt will remain below 3% in 2023,” S&P added.

The outlook is stable.

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