New York, July 24, 2020 — Moody’s Investors Service (“Moody’s”) affirmed the ratings of RBP Global Holdings Ltd and Indivior Finance S.ar.l., (collectively “Indivior”). These include the B3 Corporate Family Rating (“CFR”) and the B3 rating on the senior secured bank credit facilities. Moody’s upgraded Indivior’s Probability of Default Rating to B3-PD from Caa1-PD. Moody’s also raised Indivior’s Speculative Grade Liquidity Rating to SGL-1 from SGL-2. The outlook on all rated entities was revised to stable from negative.
On July 24, 2020, Indivior announced that it entered into an agreement with the US Department of Justice (DOJ), the Federal Trade Commission (FTC), and US state attorneys general. The agreement resolves criminal and civil liabilities in connection with an indictment by a grand jury in the Western District of Virginia, a civil lawsuit joined by the Justice Department in 2018, and an FTC investigation. A subsidiary of Indivior plead guilty to one count of making a false claim related to health care matters in 2012. Prior to the agreement, Indivior faced various charges of alleged fraud that could have resulted in fine of $3 billion and the forfeiture of the patents that protect its drugs, including Sublocade and Perseris.
Indivior will be obligated to make an upfront payment of $100 million once the agreement is finalized, followed by payments of $50 million per year beginning in 2022. The remaining balance will be paid in full on December 15, 2027. Moody’s views the settlement a credit negative, as settlement payments will consume cash over several years. Partially offsetting these cash outflows related to the settlement is Indivior’s significant cash balance of more than $900 million.
Supporting the outlook revision to stable is Moody’s view that Indivior’s DOJ settlement payments will be manageable with Indivior’s significant cash balances. Moody’s expects that Indivior’s cash is sufficient to support strategic investments for the ongoing commercialization of Sublocade and Perseris over the next 18 months, and a working capital unwind associated with sales rebates and returns within Medicaid.
Indivior still faces key uncertainties to the future of its business. Successful uptake of its newer products, Sublocade and Perseris, is critical for more than offsetting erosion of its Suboxone Film product to generic competition. Commercial success in both of these products will require significant investment which risk EBITDA running negative over the next 12 to 18 months.
Issuer: Indivior Finance S.ar.l.
Indivior’s B3 Corporate Family Rating reflects significant revenue concentration in a key product — Suboxone Film, which accounts for about 50% of its revenue. The sustainability of Indivior’s future business profile hinges on the successful commercialization of its newer products, Sublocade and Perseris. Indivior will be dependent on their success to improve revenue diversity and partially offset the significant earnings declines from Suboxone due to generic competition. Prolonged stay-at-home orders and physical distancing protocols related to the coronavirus pandemic, risk delays to Indivior’s commercialization efforts as sales force interactions with doctors remain limited. Supporting the rating is Indivior’s significant cash balance of more than $900 million, prior to settlement payments, relative to $237 million of funded debt.
The SGL-1 Speculative Grade Liquidity Rating is supported by Indivior’s large reported cash balance of more than $900 million at March 31, 2020. Indivior will consume cash over the next 12 months due to settlement payments and a decrease in payables related to sales returns and rebates to government accounts. Further, Indivior is investing significantly to support the commercial uptakes of Sublocade and Perseris. Moody’s expects cash balances to be in excess of $500 million at the end of 2020. Indivior has a $50 million revolver expiring in December 2022 that Moody’s expects will remain undrawn. The credit agreement contains a maximum 3 times net secured debt/EBITDA covenant that permits up to $250 million of cash to be netted. Moody’s believes that covenant compliance will be good over the next twelve months given its net cash position.
Social and governance considerations are material to the rating. Key social risks include Indivior’s exposure to opioid-related litigation. Additionally, Indivior will be making cash payments related to settlement with the DOJ for various years. Governance considerations include Indivior’s policy to maintain cash in excess of its $237 million outstanding balance on its term loan. As part of the announced agreement, Indivior will enter a 5-year Corporate Integrity Agreement (CIA) with the Office of Inspector General of the Department of Health and Human Services (HHS), another governance consideration.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to a downgrade include slow uptake in the launch of Sublocade and Perseris, or significant cash depletion prior to Indivior’s term loan maturing or if it fails to refinance the term loan well in advance of the December 2022 maturity.
Factors that could lead to an upgrade include fast uptake in the launch of Sublocade and Perseris and improved revenue diversity.
UK-based RBP Global Holdings Ltd is a subsidiary of publicly-traded Indivior PLC (collectively with other subsidiaries “Indivior”), a global specialty pharmaceutical company headquartered in Richmond, Virginia. Indivior is focused on the treatment of opioid addiction and closely related mental health disorders. Reported revenue for the twelve months ended March 31, 2020 approximated $700 million.
The principal methodology used in these ratings was Pharmaceutical Industry published in June 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1062755. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
For further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.
The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.
At least one ESG consideration was material to the credit rating action(s) announced and described above.
The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.
 Indivior press release (company website), July 24, 2020.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.
Morris Borenstein VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Jessica Gladstone, CFA Associate Managing Director Corporate Finance Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653
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