Oracle maintains 'BBB' rating post-Cerner acquisition

Fitch Ratings upheld the long-term issuer default rating and unsecured debt of Oracle at "BBB."

According to Fitch, after acquiring EHR vendor Cerner in June, Oracle has constrained additional debt issuances and share buybacks and is focusing instead on repaying maturities through fiscal 2024. 

With the projected EBITDA leverage staying below 3.5 times, Fitch said it anticipates that in fiscal 2025, the company will resume activities such as debt refinancing and share buybacks, all while ensuring that EBITDA leverage remains below 3.5 times. 

Following a temporary dip in EBITDA margins following the acquisition of Cerner, Oracle has seen a rebound in profitability the past few quarters, nearing levels seen before the acquisition, according to Fitch.

Fitch anticipates a trajectory toward 50% EBITDA margins in the intermediate term as Cerner becomes fully integrated, and Oracle's sustained growth in cloud products is expected to mitigate a decline in on-premise products.

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