S&P revises Elevance outlook to negative

S&P said it revised its outlook for Elevance Health Inc. to negative from stable and affirmed the A ratings on the company and its senior unsecured debt.

On Nov. 15, the agency published its revised criteria for analyzing insurers' risk-based capital.

“The negative outlook reflects the potential for a one-notch downgrade if Elevance Health's capital adequacy does not improve, as expected, toward a moderate redundancy at the 99.5% confidence level (moderate stress) in 2024-2025. While we expect Elevance Health's balance sheet and cash flow strengths to continue to provide financial flexibility, outsized merger and acquisition activity resulting in a material increase to goodwill and intangibles, increased debt needs, or elevated share repurchases could drive lower capitalization.

“In our base case, we expect financial leverage of 35%-40%, financial obligations to EBITDA of 2x-2.5x, and EBITDA fixed-charge coverage of 10x-12x in 2024-2025,” S&P said in a statement.

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