Fitch downgrades Dedalus

Fitch Ratings said it downgraded Dedalus SpA's long-term issuer default rating to B- from B. Fitch also trimmed Dedalus Finance GmbH's €1.16 billion senior secured term loan B to B from B+. The recovery rating remains RR3.

“Despite the company's strong position in the fragmented European healthcare software market, the downgrade reflects increased leverage driven by debt-funded acquisitions that have not contributed significant EBITDA. The downgrade also reflects structurally higher R&D costs and slower organic growth, with Fitch-defined EBITDA leverage projected to only decline to below 7x by end-2025,” the agency said in a press release.

Fitch said it projects Dedalus' gross leverage to climb in 2022 to 12x on a funds-from-operations basis and close to 10x on an EBITDA basis due to slow revenue growth, increasing R&D spending and substantial marketing costs that it continues to incur for new contract tenders.

The outlook is stable.

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