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inVentiv rated ‘negative’ by Moody’s on integration concerns

By Gareth Macdonald , 17-Apr-2012
Last updated on 17-Apr-2012 at 14:45 GMT

Moody’s Investors Service has cut its rating of inVentiv Health, suggesting the firm's recently expanded CRO business faces 'continued challenges.'

In a note published last week the agency said it had adopted a ‘negative’ outlook arguing that industry-wide pricing pressure, project delays and the difficulties associated with integrating PharmaNet and i3  may result in continued ‘underperformance’ of inVentiv’s contract research business.

Moody’s also predicted that inVentiv will experience a near-term drop in liquidity, again raising the likelihood of higher costs associated with its expanded CRO business as the significant factor.

While the company had a strong cash balance [$109m] at the end of December 2011, Moody's anticipates significant cash burn in the first half of 2012 due to the timing of bond payments, credit amendment fees, cash severance and costs to achieve synergies, bonuses and acquisitions.

While Moody's expects near-term weakening of liquidity, it is still expected to be adequate over the next twelve months.”

On a more positive note for inVentiv, Moody’s suggests that the size of the firm relative to other CROs and the diversity of its offering – expanded by recent acquisition's like Kforce Clinical Research and SDI – “could result in increased cross-selling opportunities and stronger client relationships.”

Moody’s comments follow just weeks after Standard and Poor's (S&P) raised its own concerns about the integration of inVentiv’s recent acquisitions , suggesting that: “Given the absence of its own key scientific and management expertise in the CRO space, inVentiv depends on retaining key leadership talent from i3 and PharmaNet.”

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