UnitedHealth (UNH) senior unsecured debt rated by Moody’s – March 9, 2017

0


UnitedHealth Group Inc. UNH recently announced that its senior unsecured debt was rated A3 by Moody’s Investors Service, a branch of Moody’s Corporation (AGC Free report). The senior unsecured debt will likely be issued in two tranches – maturing April 2027 and April 2047. The outlook for ratings was negative.

The new shelf registration will replace the previous one, which was scheduled to come into effect on February 21, 2017. The previous shelf registration was also rated A3 by Moody’s.

UnitedHealth intends to use the net proceeds of the Debt Offering to repay commercial paper debt obligations and for other general corporate purposes, including the repayment or repurchase of outstanding securities. or debt refinancing.

If the company manages to use the product as intended, its debt load is unlikely to change significantly. We note that UnitedHealth’s financial leverage is above Moody’s expectations, which is probably the main reason for the ratings assigned. The company intends to reduce its financial leverage to less than 40% by the end of 2017. The company also plans to reduce share buybacks in order to balance the equity portion of its capital structure. For the remainder of 2017, the company is expected to have nearly $ 2.73 billion in senior unsecured debt.

Moody’s A3 senior unsecured debt rating for UnitedHealth and UnitedHealthcare Insurance Company (UHIC) Insurance Financial Strength (IFS) A1 rating are primarily driven by the company’s strong national presence and its brand name, large base of members and its diversified offerings. The company’s financial health is supported by consistently high earnings, a well-diversified investment portfolio and strong creditworthiness.

UnitedHealth’s focus on effective debt management is evidenced by its healthy balance sheet. The strong underwriting results of the company as well as strong fundamentals have reinforced shareholder confidence in the stock. Over the past year, the stock has gained 37%, while the Health Maintenance Organization (HMO) industry ranked by Zacks saw an increase of 17%.

According to Moody’s Investors Service, the company is unlikely to receive an improved outlook attributed in the short term. Nonetheless, the outlook may become stable again if the company can take certain corrective measures. To this end, UnitedHealth requires a leverage ratio of less than 40%, EBITDA margins of around 9% with interest coverage of at least 10x. In addition, the Consolidated Venture Capital Ratio (RBC) must be at least 250% at the Company Share Level (CAL). However, the ratings may be further lowered if UnitedHealth does not meet these requirements.

Zacks rank and actions to consider

UnitedHealth currently wears a Zacks Rank # 3 (Hold).

Some higher-ranking stocks in the medical sector include HCA Holdings, Inc. HCA and Avinger, Inc. AVGR. Both stocks hold a Zacks Rank # 2 (Buy). You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.

HCA Holdings has delivered positive surprises over the past four quarters with an average beat of 10.16%.

Avinger has delivered positive surprises in two of the past four quarters with an average beat of 4.35%.

8 stocks with huge profit potential

Just Released: Driverless Cars: Your Roadmap to Mega Profits Today. In this latest special report, Zacks’ aggressive growth strategist Brian Bolan explores a full-fledged technological breakthrough underway – self-driving cars. It also highlights 8 stocks with enormous gain potential to feed off this phenomenon. Click to view stocks right now >>


Share.

Comments are closed.