Moody's cuts Gordian Medical

Moody's Investors Service said it downgraded Gordian Medical, Inc.'s corporate family rating to B3 from B2, probability of default rating to B3-PD from B2-PD and senior secured credit facilities to B2 from B1.

“The downgrade of the CFR reflects a material deterioration in Gordian's operating performance and weakened liquidity. This was due to higher operating costs, notably labor costs, and a change of the company's product selection practices in response to targeted probe and educate (TPE) audits performed by the Centers for Medicare and Medicaid Services (CMS). As a result, Moody's expects adjusted Debt/EBITDA to increase to 6.6x in 2022, up from 5.4x in 2021 (Moody's estimate),” the agency said in a press release.

The lower rating also reflects weakened liquidity due to an expectation that Gordian will not generate positive free cash flow in 2022 due in part to increased tax payments in 2022, Moody’s said.

The outlook is stable.

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