S&P Global Ratings downgraded Akorn Inc.'s rating to B- from B due to continued uncertainty regarding several business challenges.
The outlook on the rating is stable, reflecting Akorn's sizable cash balance, which gives company management time to address the issues, S&P said.
The maker of generic drugs recently received a warning letter from the U.S. Food and Drug Administration for violating manufacturing regulations at its troubled Decatur, Ill., facility.
Such challenges could further reduce Akorn's EBITDA and free cash flow generation, which fell in the past year, bringing adjusted leverage to around 8x.
S&P said efforts to address deficiencies highlighted by the FDA are likely to incur additional costs, some of which may become recurring expenses.
In addition, the rating agency expects heightened expenses to keep leverage high, over 7x, for the next two years and around 8x next year.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global Inc. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.