Moody's rates LabCorp notes Baa2

Moody's Investors Service said it assigned a Baa2 rating to the proposed senior unsecured note issuances of Laboratory Corp. of America Holdings.

The outlook is stable.

Proceeds will be used to fund the previously announced acquisition of Genzyme Genetics, a business unit of Genzyme Corp., and for general corporate purposes.

"While the initial increase in the company's debt load resulting from the acquisition financing will be considerable, we believe that future growth and the company's stable free cash flow will aid in reducing leverage from this temporary elevated level," Dean Diaz, a Moody's senior credit officer, said in a statement.

LabCorp's Baa2 rating reflects the company's modest leverage and continued strong operating results and free cash flow generation, the agency said.

Continued growth in the company's esoteric business is expected to contribute to margin performance while stable cash flow continues to support the company's good liquidity position, the agency noted.

Pressure from broader economic factors, including a decrease in physician visits and still high unemployment levels, could hurt volumes in routine testing and increase exposure to bad debt expense, Moody's said.

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