S&P lowers Aegis Toxicology view to negative

Standard & Poor’s said it affirmed the B corporate credit rating on Aegis Toxicology Corp. and revised the outlook to negative from stable.

The agency also said it affirmed the B rating on the company’s first-lien revolver and term loan. The recovery rating on this debt remains at 3, indicating 50% to 70% expected default recovery.

S&P also said it affirmed the CCC+ rating on its second-lien term loan. The recovery rating on this debt is 6, indicating 0 to 10% expected default recovery.

The negative view reflects the new reimbursement environment for toxicology testing servicers and a belief that the reimbursement environment remains uncertain, the agency said.

This significant uncertainty about reimbursement will continue through 2017 and beyond, S&P said, and there is a possibility that Aegis could perform below lowered expectations, which could result in negative free cash flow over time.

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