Bristol-Myers Squibb Co.

The outlook is negative, reflecting credit metrics that are currently weak for the rating. Although Bristol-Myers Squibb has reiterated its commitment to reduce leverage following the transaction, and has historically maintained very conservative financial policies, the negative outlook reflects risk to our base case that the company will reduce leverage below 1.8x in 2022. We could lower the rating if we expect Bristol-Myers to sustain adjusted leverage above 1.8x. It has limited capacity for material further acquisitions or share repurchases. We could revise the outlook to stable if the company restores leverage below 1.8x, building capacity at the rating, while also maintaining or strengthening the business. Revenue expected to increase nearly 60% in 2020 and 8% in 2021. EBITDA margin

...Bristol-Myers is now one of the largest pharmaceutical companies in the world, with pro forma combined revenue of about $40 billion. On its own, Bristol-Myers Squibb Co. has several blockbuster drugs and is an innovator in oncology. Its acquisition of Celgene Corp. has added a strong position in hematological oncology. The company is now a clear leader in oncology, alongside Roche. In total, the company has eight blockbuster drugs, including cardiovascular and immunology drugs. Leverage will be elevated due to the MyoKardia acquisition. The acquisition announcement is surprising given the normally very conservative company had just closed on its acquisition of Celgene less than a year ago. Thus, we revised the outlook to negative. However, we affirmed the rating because of the company's sizable free cash flow and commitment to reduce leverage. We believe the MyoKardia acquisition makes sense strategically. It adds a promising prospect to Bristol-Myers Squibb's pipeline and improves diversity...

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