Moody's downgraded Akorn Inc.'s corporate family rating to B3 from B1 and revised the ratings outlook to developing from ratings under review.

The rating agency said the downgrade reflects Lake Forest, Ill.-based Akorn's deteriorating stand-alone credit profile and the decreasing likelihood that it will be acquired by Germany's Fresenius SE & Co. KGaA.

The Delaware Chancery Court recently ruled in favor of Fresenius in its bid to terminate a merger deal with Akorn.

Moody's also downgraded Akorn's probability of default rating to B3-PD from B1-PD and its speculative grade liquidity rating to SGL-2 from SGL-1, with Moody's expecting good liquidity during the next 12 to 15 months.

The rating agency said Akorn's CFR B3 rating is constrained by its high financial leverage, weak free cash flow, a mainly declining portfolio of products and competition against significantly larger companies in the generic drug industry.

Moody's said it believes the company's debt/EBITDA will rise in 2019 unless the Akorn decides to voluntarily repay debt or significantly decreases its cost base. Moreover, Akorn could experience obstacles in approval of new products from the U.S. Food and Drug Administration if it is unable to resolve the issues at its Decatur, Ill. plant.

The rating action concludes Moody's ratings review which was initiated April 26, 2017.

Akorn develops and sells specialized generic and branded pharmaceuticals, over-the-counter medicines and animal health products.