Global Header | Moody's
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

Terms of One-Time Website Use

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Related Issuers
Rating Action:

Moody's assigns Baa2 issuer rating to Alcon; stable outlook

22 Mar 2019

London, 22 March 2019 -- Moody's Investors Service has assigned a Baa2 long-term issuer rating to Alcon Inc. ("Alcon" or "the company"). The outlook on the rating is stable.

This is the first time that Moody's assigned ratings to Alcon, a global manufacturer of eye care medical equipment and products which is being spun off from Novartis AG (Novartis, A1 stable).

Today's new rating assignment mainly reflects the following factors:

-- Leading positions in eye care products and devices with global reach and well-known brands

-- Supportive volume trends offset by regulatory constraints and downward price pressures

-- Solid credit metrics supported by adjusted leverage trending towards 2.5x

-- Degree of execution risk related to the spin-off, with separation costs reducing cash flow

RATINGS RATIONALE

Alcon's Baa2 long-term issuer rating reflects (1) the company's large scale and leading positions in the market for eye care devices and products, supported by its comprehensive product portfolio in this segment, with products catering for all the main eye conditions and diseases, (2) which affect a growing proportion of the world's ageing population and contributes to positive trends in demand and volume, (3) a rather conservative financial policy and resulting solid credit metrics pro forma for the spin-off, and (4) its excellent liquidity.

The group's credit strengths are partially offset by (1) its exposure to regulatory risks, including downward pricing pressure although Alcon operates under a variety of regulatory regimes, (2) the execution risks associated with the spin-off from Novartis despite the transition agreements in place, and (3) close to $300 million separation costs in 2019-2020, leading to weak free cash flow (FCF) forecast in the period.

Alcon's business profile benefits from its scale, leading market shares, and diversification. The group serves a vast but consolidated market which management estimated at $23 billion in 2017, split between ophthalmic surgical products for around 60% and vision care products for around 40%. Alcon claims the leading position in surgical eye care products and devices, ahead of Johnson & Johnson (J&J, Aaa stable), Bausch Health Companies Inc. (Bausch, B2 stable), The Cooper Companies, Inc. and Carl Zeiss AG. In vision care, Alcon is the second largest behind J&J while it is larger than Bausch and The Cooper Companies, Inc.

The rating agency expects strong demand for Alcon's products to continue, with volumes increasing in the mid-single digits in percentage terms in surgical and a little lower in vision care. Growth in surgical is driven by an ageing population and increasing penetration of equipment and products, leading to a greater number of surgical procedures. The company's large diagnostics and visualisation equipment base will support recurring sales of implantables and consumables as part of surgical packs. Alcon's offering caters for the most acute eye conditions and diseases such as glaucoma and cataracts and positions the group well to capture growth, for instance in advanced technology intraocular lenses (AT-IOLs), which are cataract surgery implantables. Growth in vision care is driven by the shift from re-usable to daily disposable contact lenses which the company sells under its DAILIES brands, advancements in lenses' complexity and the large proportion of the world's population which has an untreated or undiagnosed dry eye condition that Alcon's Systane product addresses. The decline in re-usable contact lenses reduces the demand for contact lens care, however.

As such, Moody's expects that Alcon will grow revenues broadly in line with volumes. Regulatory constraints in the healthcare industry expose the group to downward pricing pressures but the company partially mitigates these risks by operating under various regulatory regimes, catering for acute eye conditions and diseases which are less price-sensitive and/or have premium patient-pay pricing models.

The company needs to continue to innovate significantly to support the value proposition of its products, mitigate downward pricing pressures and reducing demand in certain areas. Nevertheless, Moody's acknowledges the material investments in Alcon's supply chain, R&D and sales and marketing over the past three years. Therefore, the rating agency anticipates that cost controls will enable Alcon to maintain its EBITDA margin of around 20% (before separation costs) in the context of high negotiating power, although it may not be as high as when part of the much larger Novartis group.

As a result, Moody's forecasts that Alcon will slowly reduce its leverage, as measured by Moody's adjusted gross debt/EBITDA, towards 2.5x in the next 18 months. At the end of 2018, the group's adjusted leverage stood at 2.8x, pro forma for the capital structure put in place for the spin-off, which includes $1.7 billion equivalent unsecured term loan facilities, a $1.5 billion unsecured bridge-to-bond facility and $300 million unsecured local facilities at operating subsidiary level. The rating agency further expects that the group's rather conservative financial policy will support credit metrics.

There are execution risks related to the spin-off of Alcon from Novartis, however Moody's believes they are manageable given the range of comprehensive long-term arrangements with Novartis, good governance standards and current management's good experience in the medtech industry and with Alcon in particular. The planned separation from Novartis will require significant financial resources to the tune of $300 million in 2019-2020, which will represent a significant dent on the cash flows of the group such that Moody's forecasts that Alcon will be FCF breakeven in 2019. By comparison, the rating agency estimates that Alcon generated FCF of approximately $300 million in 2018 (including capex on tangible and intangible assets as well as business development & licensing outflows) or 8% of adjusted debt pro forma for the spin-off capital structure.

Moody's views Alcon's liquidity as excellent. Following the spin-off, the group will have an opening cash balance of $500 million. Liquidity will be further supported by expected funds from operations of around $900 million in 2019 (before working capital, capex and dividends) and access to a fully undrawn $1,000 million equivalent revolving credit facility (RCF) with no maintenance covenants and no MAC clause.

RATING OUTLOOK

The stable outlook reflects the expectation that (1) Alcon will continue to grow revenues and earnings (before separation costs) by low-to-mid single digits in percentage terms on an annual basis, without experiencing major product recalls and withdrawals and such that (2) Alcon's leverage, as measured by Moody's adjusted gross debt/EBITDA, will trend towards 2.5x within the next 12-18 months and (3) FCF will be firmly positive after 2019. Further, the stable outlook assumes (4) no material debt-funded business acquisitions and no increase in the dividend payout ratio.

WHAT COULD CHANGE THE RATING UP/DOWN

Alcon's ratings could experience positive pressure should (1) the group execute its separation with Novartis on time and on budget, (2) Moody's-adjusted gross debt/EBITDA sustainably decrease towards 2.0x, and (3) the group establish a track record of conservative policy characterised by the absence of debt-funded acquisitions or dividend payout ratio increases.

Conversely, Alcon's ratings could come under downward pressure if (1) any of the conditions required for a stable outlook was not to be met and (2) Moody's adjusted gross debt/EBITDA was maintained sustainably above 3.0x.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings was Medical Product and Device Industry published in June 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

Alcon, headquartered in Geneva, Switzerland, is an eye care device and product company, producing ophthalmic surgical devices under various brands, including Centurion and Constellation vision systems, contact lenses under Dailies, Air Optix, and Freshlook key brands, and ocular health products under Systane, Clear Care, and Opti-Free brands among others. As part of its spin-off from Novartis, the company plans to have all its shares listed on the SIX Swiss Exchange (SIX) and the New York Stock Exchange (NYSE). Alcon expects to complete the spin-off during the first half of 2019. Novartis will not hold any shares in Alcon or provide any financing to Alcon after the spin-off. In 2018, Alcon reported revenue of $7.15 billion.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Frederic Duranson
AVP - Analyst
Corporate Finance Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Richard Etheridge
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454

No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​
Global Footer | Moody's