Moody's revises PharMEDium's rating outlook to negative after FDA warning letter; affirms B3 CFR

Global Credit Research - 31 Jul 2014                

 

Approximately $635 million rated debt affected

New York, July 31, 2014 -- Moody's Investors Service changed PharMEDium Healthcare Corporation's ("PharMEDium") rating outlook to negative from stable, while affirming its ratings including the B3 Corporate Family Rating and B3-PD Probability of Default Rating. Moody's also affirmed the B1 rating on the first lien senior secured facilities and Caa2 rating on the second lien term loan.

The change of outlook to negative follows the company's disclosure of receipt of a warning letter from the Food and Drug Administration ("FDA") in late July based on observation made during FDA inspection of PharMEDium's facilities in early 2013. The letter cited that PharMEDium violated certain quality requirements under the applicable Good Manufacturing Practices ("cGMPs") and demanded corrective actions within fifteen days upon receipt of the letter. Moody's believes the issuance of a warning letter indicates an escalation of regulatory and compliance risk facing the company and the entire drug compounding industry. The negative outlook contemplates the increased uncertainty on the company's operation and liquidity from the warning letter, if not resolved appropriately and timely, could lead to potential product recalls, or other enforcement actions or customer losses.

The affirmation of the B3 CFR, however, reflects Moody's expectation that the company will proactively manage the risks in order to resolve the issue and alleviate the FDA's concern in the near term. In addition, Moody's anticipates management will use its best effort to avoid service disruptions to customers while working through this issue. Barring potential disruption from the FDA letter, Moody's also expects the company to continue to grow its revenue and earnings, remain on-track with its deleveraging plan and maintain a good liquidity.

Ratings affirmed as follows:

Corporate Family Rating at B3

Probability of Default Rating at B3-PD

First lien senior secured credit facilities at B1, LGD3

Second lien senior secured term loan at Caa2, LGD5

RATING RATIONALE

The B3 CFR incorporates the business risk arising from PharMEDium's singular focus on the sterile compounding outsourcing service industry and heightened regulatory risk in light of increasing regulatory oversight of the industry. These upcoming changes, as contemplated in the Drug Quality and Security Act (DQSA) and recently proposed interim guidance on applicable Good Manufacturing Practices ("cGMP") for drug compounding industry (subject to final approval) by the FDA, could materially impact the company's operations and financial results. The rating also incorporates the company's small size, fragmented industry characteristics and aggressive financial leverage deployed in the capital structure as a result of the LBO transaction. Moody's expects debt/EBITDA to remain materially above 5.5x in the next 12-18 months.
continue to read here

Question of the Day August 1, 2014 Ever since the indictment regarding compounded pain creams in California, the compounding industry has appearedr to ramp up training, advertising and promoting compounded pain creams, gels, etc. Is this going to turn out to be just the move the FDA and law enforcement was needing and wanting the industry to make? Doesn't it appear the industry thought the end of these type of compounded medications might be near or in danger so they have been pushing hard to keep the billion dollar industry producing as much money as possible?

Any Comments on this compounding pharmacy rep job in Dallas? Claims Transdermal pain therapy is a 30 billion dollar industry and growing.

Compound Pharmacy Reps, Stop and Look now!

Company Description ClinicalCorp, (with our partner Greg Normans 500 million dollar Great White Shark Opportunity Fund) is now looking for physician's with your specialty to participate in our Clinical Corp Coordinator program. Average physician's in our program generate approximately $4,000 - $8,000 a month in additional income for moments of their time. Simply put, patients fill out a HIPPA compliant 10 question survey, where by your desk manager takes about 60 seconds to upload 4 of these responses to our system. Compensation is 15 minutes of time at a rate of $150.00 per hour. If you have 200 patients a month who come through your doors, and they each fill a survey, you would be compensated $7,500.00 for your time. ClinicalCorp is employed by compounding pharmacies to report on Related Health Problems (ICD Classifications) where certain medications are used for treatment. It is important that the Physician have practical application and knowledge in these areas for their participation in our programs. Job Description Transdermal pain therapy is a 30 billion dollar industry and growing. It is an alternative non-addictive, non-narcotic and non-sedating pain therapy for patients of all ages. Take advantage of this exciting opportunity which offers the highest commissions in the industry through established pharmacies, compounding with only he highest quality PCCA based formulations. o Non-Narcotic o Non-Addictive o Non-Sedating o Targets to Site of Pain o Customized to Patient Needs o Made to Order o Minimal Systemic Concentration o Minimal Drug Interaction Risk o Customizable Formulations o Odorless o Private/Commercial insurance accepted Responsibilities: -Leverage existing physician relationships to market the products -Target and develop new customer opportunities to continually drive market penetration -Maintain a high level of product and technical knowledge -Keep strong relationships in order to easily bring other products/services/devices in the future Requirements: Already marketing transdermal pain, wound, scar or other compounded therapies If so, we'd like to speak with you if you are experiencing any of the following: Not able to offer your physicians a professional services agreement Compensation: Commission Only - You should be able to make a six figure income even at a part time status if you have the relationships, experience and drive. Reps take home $80,000 per year on the low end . . . Top reps take home $50K+ per month. Scripts adjudicate from $1,000.00 to $13,000.00 (per script) No compensation cap Our tiered compensation plan based on sales is ultra competitive Near Real-Time sales portal offering updates on a per script basis Click here to apply.

ID#: 216083066 Location: Dallas, TX

Read more at http://dallas-tx.geebo.com/jobs-online/view/id/216083066-compound_pharmacy_reps_stop/#YzfytBQasU0wFzEH.99

Attorney General Holder: Condemned Should Know Lethal Drugs

By Pete Williams

 

Attorney General Eric Holder said Thursday that condemned prisoners have a right to know the composition and sources of the drugs to be administered in carrying out the death penalty.

His comments, during an interview with Gwen Ifill on the PBS NewsHour, come as the Justice Department is working to complete a study, ordered by President Obama in May, on the growing controversy over lethal injection.

continue to read here

FDA Outsourcing Fee Rates for 2015

http://regulations.justia.com/regulations/fedreg/2014/08/01/2014-18111.html