Moody's may up U.S. Oncology, affirms McKesson

Moody's Investors Service said it affirmed McKesson Corp.'s Baa2/prime-2 ratings and stable outlook following news that the company has signed a definitive agreement to acquire U.S. Oncology for about $2.16 billion.

Moody's also said it is placing the B2 corporate family ratings of U.S. Oncology Holdings, Inc. and U.S. Oncology, Inc. under review for possible upgrade.

Moody's said it understands that McKesson plans to refinance the existing debt of U.S. Oncology, which will add about $1.7 billion of incremental debt to its balance sheet.

The agency said it anticipates that U.S. Oncology's existing ratings will be withdrawn if the debt is taken out.

Moody's said it believes the acquisition will reduce McKesson's flexibility to engage in further acquisitions, but its financial strength measures should remain at levels appropriate for its Baa2 rating.

U.S. Oncology should offer McKesson greater opportunities to partner with community-based oncologists, augmenting its existing specialty distribution business, the agency said.

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