Maravai ratings downgraded by Moody’s over weakened performance

Investing.com -- Moody’s Ratings has downgraded the ratings of Maravai Intermediate Holdings, LLC, including the corporate family rating (CFR) to B3 from B2 and probability of default rating (PDR) to B3-PD from B2-PD. The ratings on the backed senior secured first lien term loan B and backed senior secured first lien revolving credit facility were also downgraded to B3 from B2. Additionally, the speculative grade liquidity rating has been lowered to SGL-2 from SGL-1. Moody’s has revised the outlook for Maravai to negative from stable.

The downgrade is a result of Maravai’s weakened operating performance, which stems from decreased demand for the company’s products and services, particularly in its Nucleic Acid Production (NAP) segment. The NAP segment, which accounts for about three-quarters of Maravai’s revenue and includes mRNA technologies like CleanCap used in certain COVID-19 vaccines, has seen a significant drop in demand. This decline, coupled with uncertain funding for early-stage biotech firms and an unpredictable regulatory environment for pharmaceutical companies, presents significant challenges for Maravai.

Moody’s negative outlook is based on the expectation that Maravai’s gross debt/EBITDA will turn negative within the next 12 to 18 months due to negative adjusted EBITDA. Although Maravai’s liquidity is expected to remain strong due to its solid cash position, negative EBITDA and free cash flow generation may lead to a gradual deterioration in the company’s liquidity. This weak operating performance could put pressure on Maravai’s ability to refinance its debt, which matures in October 2027.

Governance and social risk considerations also played a role in the rating action. Maravai is expected to generate negative EBITDA and free cash flow despite its significant cash balance. This could keep its gross financial leverage negative until the company can generate revenue above its high fixed cost base, potentially affecting its ability to refinance the capital structure. Maravai also faces indirect exposure to a weaker healthcare funding environment and regulatory uncertainty in the U.S. pharmaceutical sector.

Maravai’s B3 CFR reflects its small size and significant earnings volatility, which are expected to result in negative EBITDA and thus negative financial leverage in 2025 and 2026. Despite these challenges, Maravai’s rating is supported by its Biologics Safety Testing (BST) segment, which adds some stability to sales and earnings, and its good liquidity, characterized by cash balances of $285 million as of March 31, 2025.

Over the next 12 to 18 months, Maravai is expected to maintain good liquidity, backed by its cash balance. However, this is offset by expectations of negative free cash flow due to high fixed costs and insufficient sales to generate positive EBITDA. External liquidity is supported by a $167 million backed senior secured first lien revolving credit facility expiring in 2029, which is expected to remain undrawn.

The negative outlook reflects the expectation that financial leverage will remain negative over the next 12 to 18 months, with expected negative free cash flow leading to a deterioration of the current cash position.

The ratings could be upgraded if Maravai significantly increases its scale, product diversification and customer concentration, returns to positive EBITDA, and demonstrates solid revenue and earnings growth across its key business segments. Conversely, the ratings could be downgraded if Maravai’s operating performance or liquidity weakens further, or if the regulatory environment for the pharmaceutical sector significantly impacts Maravai’s business prospects.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.