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TEXT-S&P rates UnitedHealth Group notes 'A'
October 17, 2012 / 3:56 PM / 5 years ago

TEXT-S&P rates UnitedHealth Group notes 'A'

Oct 17 - Standard & Poor's Ratings Services said today that it has assigned
its 'A' senior unsecured debt ratings to UnitedHealth Group Inc.'s 
(NYSE:UNH) planned debt issuance, which the company expects to consist of a mix
of three- to 30-year securities.

We expect the company to use the offering proceeds to fund part of its 
acquisition of Amil Participacoes S.A. UNH expects the transaction to be 
finalized in the first half of 2013. We consider this transaction to be 
consistent with UNH's growth strategy, which is supported by a combination of 
organic development and acquisition. Pro forma debt leverage will be 
moderately above 35% after the transaction, but will return below that 
threshold by mid-year 2013. In our view, key risks relate to the 
sustainability of economic development in Brazil and the country's 
receptiveness to foreign investment.

Key factors supporting UNH's current ratings and stable outlook include its 
very strong business profile, strong earnings and cash flow, and very strong 
financial flexibility relative to its peers and the sector overall. UNH 
operates as the established market leader across all key health benefits 
segments (particularly in the higher growth and more operationally sensitive 
government-sponsored segments), possesses extensive technological capability, 
and has demonstrated relatively keen market awareness about prospective risks 
and opportunities.

By year-end 2012, we expect revenue to be approaching $110 billion and for 
membership to be above 36 million, and operating income (EBIT) and cash flow 
(EBITDA) to be $8.0 billion-$8.5 billion (7%-8% return on revenue) and $9.0 
billion-$9.5 billion (8%-9% margin), respectively. If UNH were to perform at a 
level consistent with these expectations, adjusted EBITDA interest coverage 
would continue to be well above 10x. These results, combined with an expected 
cash position near $1.0 billion at the holding company level at year-end 2012, 
would likely continue to support a very strong liquidity position and strong 
financial flexibility assessment overall.

Holding Company Analysis, June 11, 2009

UnitedHealth Group Inc.
 Counterparty Credit Rating             A/Stable/A-1

New Ratings
UnitedHealth Group Inc.
 Senior unsecured notes                 A

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