S&P Global Ratings affirmed the BB long-term corporate credit rating on PRA Health Sciences Inc. and revised the outlook to stable from positive after its decision to acquire Symphony Health Solutions for $530 million in cash.
The outlook revision reflects S&P's view that the deal is credit negative due to the increase in adjusted debt leverage. For the long term, adjusted debt leverage is expected to stay in the 3x to 4x range and S&P believes it is less likely to reach below 3x.
In addition, the rating agency said PRA Health's EBITDA growth, cash generation and mandatory debt repayment facilitate rapid deleveraging.
S&P said despite PRA Health's vulnerability to trial cancellations and delays such as other contract research organizations, the company's growth is faster than the industry average, indicating market share gains primarily driven by the addition of a few large clients.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.