Moody's changes Cardinal outlook to stable

Moody's Investors Service said it changed the outlooks of Cardinal Health, Inc. and its subsidiary, Allegiance Corp., to stable from negative and affirmed Baa2 long-term and Prime-2 short-term ratings.

"Over the near term, we expect Cardinal to fund growth initiatives with internal cash, minimizing the risk that credit metrics will be outside of targeted ranges for the current rating," Diana Lee, a Moody's senior credit officer, said in an agency news release. "Its procurement arrangement with CVS Caremark helps position the company in this changing sector."

Cardinal's Baa2 rating reflects the company's position as one of the nation's leading drug and medical surgical distributors, its relatively large revenue base and Moody's expectation of moderate leverage, the agency said.

However, the ratings also reflect the company's low margins, customer concentration risk and relatively aggressive posture toward shareholder initiatives, Moody's said.

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