A.M. Best Comments on Credit Ratings of UnitedHealth Group Incorporated and Its Subsidiaries Following Acquisition Announcement of Surgical Care Affiliates

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has commented that the Credit Ratings (ratings) of UnitedHealth Group Incorporated (UnitedHealth) (Minnetonka, MN) [NYSE:UNH] and its insurance and health maintenance organization subsidiaries remain unchanged following the announcement that UnitedHealth’s Optum operations has entered into an agreement to acquire Surgical Care Affiliates, Inc. (SCA), an ambulatory surgery center and surgical hospital provider, for approximately $2.3 billion.

It is anticipated that SCA will become a part of the OptumCare division. The combination of OptumCare and SCA will increase materially the number of outpatient facilities for the organization, as well as add ambulatory and surgical care capabilities to complement OptumCare’s primary and urgent care services. The transaction follows OptumCare’s focus on quality, cost-efficient health care delivery. Additionally, A.M. Best sees the potential for synergies with UnitedHealth’s medical cost management.

A.M. Best anticipates that UnitedHealth will finance the transaction through the issuance of common stock, up to 80%, with the remaining balance in cash. It is expected that the transaction will be neutral to slightly favorable to UnitedHealth’s financial leverage. UnitedHealth’s debt-to-capital ratio was 47% at the end of third-quarter 2016. The current ratio is high due to debt issued in 2015 for the acquisition of Catamaran Corporation. However, UnitedHealth maintains strong interest coverage of greater than 10 times. The announced acquisition of SCA does not alter UnitedHealth’s plan to lower its financial leverage to approximately 40% by the end of 2017.

UnitedHealth maintains good financial flexibility, supported by its sizeable commercial paper program, parent company cash, subsidiary dividends and its credit facility. Furthermore, UnitedHealth has significant non-regulated operating earnings and cash flows from its Optum operations that are materially higher than that of its peers.

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best

Bridget Maehr
Senior Financial Analyst

+1 908 439 2200, ext. 5321

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Sally Rosen
Senior Director

+1 908 439 2200, ext. 5280

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Christopher Sharkey
Manager, Public Relations

+1 908 439 2200, ext. 5159

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Jim Peavy
Director, Public Relations

+1 908 439 2200, ext. 5644

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