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Moody's affirms Express Scripts' rating after $3.6B eviCore deal

Moody's affirmed the Baa2 senior unsecured rating of Express Scripts Holding Co. and its units after the company agreed to acquire eviCore healthcare for $3.6 billion.

The outlook remains stable.

The rating agency said it expects that strong cash flow will enable Express Scripts to fund upcoming debt maturities and term loan amortization, keeping debt/EBITDA below 2.5x.

Express Scripts is a leading pharmacy benefit manager with moderate leverage and strong cash flow, Moody's said. Its rating is supported by the complementary nature of eviCore's business to Express Scripts' operations.

Moody's said the stable outlook reflects its view that the company will persistently reduce debt to mitigate the potential loss of the Anthem Inc. contract in 2019.

The rating agency also believes that, excluding Anthem, the company will be able to improve client retention rates.

Express Scripts will probably consider additional acquisitions, Moody's said.