A.M. Best Comments on Credit Ratings of UnitedHealth Group Incorporated & Its Subsidiaries Following Acquisition Announcement...
January 10 2017 - 10:27AM
Business Wire
A.M. Best has commented that the Credit Ratings (ratings)
of UnitedHealth Group Incorporated (UnitedHealth)
(Minnetonka, MN) [NYSE:UNH] and its insurance and health
maintenance organization subsidiaries remain unchanged following
the announcement that UnitedHealth’s Optum operations has entered
into an agreement to acquire Surgical Care Affiliates, Inc. (SCA),
an ambulatory surgery center and surgical hospital provider, for
approximately $2.3 billion.
It is anticipated that SCA will become a part of the OptumCare
division. The combination of OptumCare and SCA will increase
materially the number of outpatient facilities for the
organization, as well as add ambulatory and surgical care
capabilities to complement OptumCare’s primary and urgent care
services. The transaction follows OptumCare’s focus on quality,
cost-efficient health care delivery. Additionally, A.M. Best sees
the potential for synergies with UnitedHealth’s medical cost
management.
A.M. Best anticipates that UnitedHealth will finance the
transaction through the issuance of common stock, up to 80%, with
the remaining balance in cash. It is expected that the transaction
will be neutral to slightly favorable to UnitedHealth’s financial
leverage. UnitedHealth’s debt-to-capital ratio was 47% at the end
of third-quarter 2016. The current ratio is high due to debt issued
in 2015 for the acquisition of Catamaran Corporation. However,
UnitedHealth maintains strong interest coverage of greater than 10
times. The announced acquisition of SCA does not alter
UnitedHealth’s plan to lower its financial leverage to
approximately 40% by the end of 2017.
UnitedHealth maintains good financial flexibility, supported by
its sizeable commercial paper program, parent company cash,
subsidiary dividends and its credit facility. Furthermore,
UnitedHealth has significant non-regulated operating earnings and
cash flows from its Optum operations that are materially higher
than that of its peers.
This press release relates to Credit Ratings that have been
published on A.M. Best’s website. For all rating information
relating to the release and pertinent disclosures, including
details of the office responsible for issuing each of the
individual ratings referenced in this release, please see A.M.
Best’s Recent Rating Activity web page. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating
Services, Inc. and/or its subsidiaries. ALL RIGHTS
RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20170110005936/en/
A.M. BestBridget MaehrSenior Financial Analyst+1 908 439
2200, ext. 5321bridget.maehr@ambest.comorSally RosenSenior
Director+1 908 439 2200, ext.
5280sally.rosen@ambest.comorChristopher SharkeyManager,
Public Relations+1 908 439 2200, ext.
5159christopher.sharkey@ambest.comorJim PeavyDirector,
Public Relations+1 908 439 2200, ext.
5644james.peavy@ambest.com
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