S&P lowers Eli Lilly

S&P said it lowered the rating on Eli Lilly & Co. to A+ and removed it from CreditWatch with negative implications.

The company completed its acquisition of Loxo Oncology Inc. for a $7.2 billion purchase price using a combination of cash and debt.

Although the agency said it believes the transaction benefits Eli Lilly's position in the attractive and rapidly evolving oncology market, this improvement is more than offset by the substantial increase in adjusted debt leverage.

S&P said it expects adjusted leverage to rise to roughly 2x for 2019, well above recent levels of roughly 1x.

The stable outlook reflects the company's strong pipeline, organic revenue growth above peers and substantial margin expansion, the agency said.

S&P said it also reflects the base-case expectation for leverage to generally improve from current levels despite a view that the company's appetite for acquisitions may be increasing.

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