Like many big health care companies, Medtronic PLC has taken on a lot of additional debt in a bid to transform itself into the medical device company of the future. But a new analysis shows the strategy comes with risks.
Carrying high debt leaves merging companies a thin cushion to absorb setbacks like litigation or unexpected integration expenses, exposing investors to potential cuts in earnings. A new analysis from Moody’s Investors Service says Medtronic has prolonged the risks by slowing down debt payments to push out profits to shareholders in dividends and share buybacks.
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