Reuters: Mergers News: TEXT-S&P: Express Scripts ratings unaffectd by Medco acquisition

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TEXT-S&P: Express Scripts ratings unaffectd by Medco acquisition Apr 2nd 2012, 18:07 Tweet Share this Email Print Related Topics Stocks » M&A » Bonds News » Bonds » Markets » Cyclical Consumer Goods » Financials » Healthcare » Mon Apr 2, 2012 2:07pm EDT April 2 - Standard & Poor's Ratings Services said today that its ratings and outlook on St. Louis-based pharmacy benefit management (PBM) services provider Express Scripts Inc. (BBB+/Negative/--) are not affected by the completion of its previously announced $29.1 billion acquisition of Medco Health Solutions Inc. Our ratings on the combined entity reflect our belief that initial leverage following the Medco acquisition is more than 3x, but we expect leverage to return to below 2x within 18 to 24 months on a combination of debt reduction and EBITDA growth. The acquisition more than doubles the size of Express Scripts and introduces substantial integration risk, which is reflected in our negative rating outlook on the company. Standard & Poor's would likely revise its outlook on Express Scripts to stable if the company is on a trajectory to reduce debt leverage, and rationalizes the combined back-office functions, distribution capabilities, and claims adjudication platforms while maintaining its existing customer base. The 'BBB+' corporate credit rating reflects Express Scripts' "satisfactory" business risk profile, supported by its solid position in the growing PBM industry and the long-term trends toward generic and mail-order drugs. The rating also reflects our assessment of the company's financial risk as "intermediate", which incorporates the additional debt burden from the Medco acquisition. (For the latest complete corporate credit rating rationale, see Standard & Poor's summary analysis on Express Scripts, published Jan. 20, 2012, on RatingsDirect.) Related Quotes and News Company Price Related News Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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