S&P lifts Aegis Toxicology

S&P said it upgraded its ratings for Aegis Toxicology Sciences Corp. and its first-lien term loan to B from B-. The 3 recovery rating indicates an expectation for meaningful (50%-70%; rounded estimate: 55%) recovery in default.

“Due to the increased demand for Covid-19 testing amid the delta variant surge, Aegis' revenue and reported EBITDA improved significantly to $650 million and $218 million, respectively, for the 12 months ended Sept 30, 2021,” the agency said in a press release.

Aegis’ improvements in its base business, by expanding its relationship with Walgreens, provides it with opportunities to expand its product manual in toxicology testing business. “Furthermore, the company also plans to expand into molecular pathology testing. We believe this will partially buffer the declining Covid-19 business and ultimately result in a stronger financial position than pre-pandemic with better cash flow and less leverage,” S&P said.

The outlook is stable.

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