Moody's placed Express Scripts Holding Co. and its units' Baa2 senior unsecured long-term ratings under review with direction uncertain after news of the company's proposed $67 billion acquisition by Cigna Corp.
The rating agency also placed the prime-2 commercial paper rating under review for downgrade.
Moody's said the ratings review is linked to the ratings review of Cigna as the insurer's Baa1 senior unsecured ratings are under review for downgrade.
The agency said its review of Express Scripts' ratings will also consider how Cigna treats the pharmacy-benefit manager's debt, including evaluating any guarantees or support mechanisms.
Moody's said the Baa2 rating takes into account Express Scripts' position as a leading pharmacy-benefit manager, moderate leverage and strong cash flow.
The rating agency said Express Scripts has experienced declining script volume and higher-than-typical customer losses, adding that the company's management will be focused on achieving better script trends and more profitable growth by adding new members and improving the rate of customer retention.
Moody's believes that challenges for the company in the sector include fewer generic-drug introductions, a trend toward softening mail-order growth, and customers' focus on cost savings and transparency.
