Moody's ups Alaris Medical

Moody's Investors Service said it lowered the debt ratings of Cardinal Health Inc. (senior unsecured debt rating to A3 from A2 and short-term debt rating to Prime-2 from Prime-1). Cardinal's outlook is negative.

Also, Moody's upgraded the ratings of Alaris Medical System Inc., including the senior implied rating to Ba1 from Ba3, the senior secured term loan and revolving bank facility to Ba1 from Ba3, the senior unsecured issuer rating to Ba2 from B1, and the subordinated debt rating to Ba3 from B2.

The outlook for Alaris' debt is stable.

Moody's rating action on Cardinal is based on concerns regarding: (1) higher leverage associated with the acquisition of Alaris as well as reliance on short-term borrowings; (2) the likelihood that Cardinal will continue to engage in leveraged acquisitions to achieve consistent shareholder returns; and (3) a rapidly changing drug distribution model, which raises uncertainty about the level of returns for this segment of Cardinal's operations.

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