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Fitch: U.S. Healthcare Leverage Creeps Up as Acquisitions ContinueDebt financed acquisitions fueled an increase in leveraged among high yield U.S. healthcare companies over the past year, according to the latest edition of Fitch Ratings' High-Yield Healthcare Checkup Handbook. Median leverage in Fitch's sample rose to 5.0x from 4.7x a year ago. "Deleveraging won't likely be a major focus of cash deployment this year as high-yield healthcare companies see more bang for their buck in acquisitions and shareholder payouts," says Megan Neuburger, Managing Director at Fitch. Fitch forecasts median leverage will increase slightly to 5.2x by end-2016 as debt balances keep pace with EBITDA growth. Pricing headwinds continue to dominate the industry's outlook. While improving economic conditions bode well for demand, secular challenges like U.S. health insurer consolidation, drug pricing scrutiny and growing healthcare consumerism will compress EBITDA margins slightly. Fitch expects 5.6% revenue growth and 4.7% EBITDA growth for the companies in its sample this year. Fitch's High Yield Healthcare Checkup Handbook, published annually, analyzes the business profiles and capital structures of the 21 largest high yield debt issuers in the U.S. healthcare industry. The companies profiled have a cumulative $158 billion of debt outstanding, including public bonds and bank loans, up from $127 billion since last year's report. The full report, "The Checkup: High-Yield Healthcare Handbook: Comprehensive Analysis of High-Yield U.S. Healthcare Companies," is available at www.fitchratings.com Additional information is available at 'www.fitchratings.com'. The Checkup: High-Yield Healthcare Handbook (Comprehensive Analysis of High-Yield U.S. Healthcare Companies) https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=880100 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. View source version on businesswire.com: http://www.businesswire.com/news/home/20160504006831/en/ |
