S&P Global Ratings affirmed 20 ratings without revising the outlooks, took two positive rating actions and four negative rating actions, and revised five outlooks favorably and one outlook unfavorably without changing the ratings, in the U.S. not-for-profit health care sector in October.
Additionally, we placed Eastern Maine Healthcare Systems in Maine on CreditWatch with negative implications reflecting weak financial performance, and revised the outlook to developing from negative on Marshfield Clinic in Wisconsin with upside rating potential related to its pending merger with Sanford Health and the downside reflecting a pressured financial profile.
There were two new ratings assigned this month to Concord Hospital in New Hampshire (issuer credit rating), and Beaufort Memorial Hospital in South Carolina (new sale). There were five additional new debt issuances in the month, with four ratings and outlooks unchanged, and one issuer outlook revised favorably; four were systems, the other was a stand-alone hospital, and all were rated 'A' or 'AA'.
The 12 rating actions and outlook revisions consisted of the following:
- Four downgrades on two systems, one stand-alone hospital, and one steam and chilled water supplier;
- Two upgrades on two stand-alone hospitals with both upgrades related to application of our Group Rating Methodology Criteria after being acquired by higher rated systems;
- Five outlooks revised favorably on one long-term care provider, three stand-alone hospitals, and one health care system, with all outlooks revised to stable from negative; and
- One unfavorable outlook revision to negative from stable on a stand-alone hospital in the 'AA' category due to operating losses and reduced cash flow.
Chart 1
Chart 2
October 2024, U.S. not-for-profit health care rating actions | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
State | Rating | Outlook | Entity type | Action | Description | |||||||||
Ann & Robert H. Lurie Children's Hospital of Chicago |
IL | AA- | Negative | Stand-alone | Unfavorable outlook revision | Trend of heightened operating losses and reduced cash flow | ||||||||
Army Retirement Residence Foundation |
TX | BB+ | Stable | Long-term care | Favorable outlook revision | Completed redevelopment led to higher occupancy and improved MADS and expected cash flow growth | ||||||||
Ascension Health Alliance |
MO | AA | Stable | System | Downgrade | Weakening financial profile from persistent operational challenges and weak DCOH | ||||||||
Beaufort Memorial Hospital |
SC | BB | Stable | Stand-alone | Rating initially assigned; New sale | Rating initially assigned based on leading market position with improving margins and lighter balance sheet | ||||||||
Cape Cod Healthcare |
MA | A | Stable | Stand-alone | Maintained | Credit quality consistent with existing rating | ||||||||
Children's Hospital of Philadelphia |
PA | AA | Stable | Stand-alone | Maintained; New sale | Credit quality consistent with existing rating | ||||||||
Christ Hospital |
OH | A- | Stable | Stand-alone | Maintained | Credit quality consistent with existing rating | ||||||||
Community Hospital of Central California |
CA | BBB+ | Stable | Stand-alone | Favorable outlook revision | Positive operating margins as a result of over $400MM in FEMA funds and underlying operational improvements. | ||||||||
Concord Hospital |
NH | A+ | Stable | System | Rating initially assigned | Rating initially assigned based on a strong financial profile and leading market position | ||||||||
Cottage Health |
CA | AA- | Stable | Stand-alone | Maintained | Credit quality consistent with existing rating | ||||||||
Eastern Maine Healthcare Systems |
ME | BBB- | CreditWatch Negative | System | Placed on CreditWatch Negative | Sizable operating loss with potential covenant violation and weak DCOH | ||||||||
Froedtert ThedaCare Health |
WI | AA | Stable | System | Maintained; New sale | Credit quality consistent with existing rating | ||||||||
Jennie Stuart Medical Center |
KY | BBB- | Stable | Stand-alone | Maintained | Credit quality consistent with existing rating | ||||||||
Kettering Health Network |
OH | A+ | Stable | System | Maintained | Credit quality consistent with existing rating | ||||||||
Kootenai Health |
ID | A | Stable | Stand-alone | Favorable outlook revision | Sustained financial recovery with unrestricted reserves and operating margin growth | ||||||||
Lee Memorial Health System |
FL | A+ | Stable | System | Maintained | Credit quality consistent with existing rating | ||||||||
Lehigh Valley Health Network |
PA | A | Stable | System | Downgrade | Based on merger with Thomas Jefferson University | ||||||||
Louisville Medical Center |
KY | BBB+ | Negative | Other* | Downgrade | Based on the downgrade of UofL Health and our application of "Rating Approach To Obligations With Multiple Revenue Stream" | ||||||||
Magnolia Regional Health Center |
MS | BB | Stable | Stand-alone | Maintained | Credit quality consistent with existing rating | ||||||||
Marshfield Clinic |
WI | BBB | Developing | System | Placed on Developing Outlook | Signed definitive agreement in affiliation with Sanford Health | ||||||||
Milford Regional Medical Center |
MA | BBB | Stable | Stand-alone | Upgrade | Acquisition by UMass Memorial Health Care and highly strategic position under GRM criteria | ||||||||
MultiCare Health System |
WA | A | Stable | System | Maintained | Credit quality consistent with existing rating | ||||||||
OhioHealth |
OH | AA+ | Stable | System | Maintained | Credit quality consistent with existing rating | ||||||||
OSF Healthcare System |
IL | A | Stable | System | Maintained; New sale | Credit quality consistent with existing rating | ||||||||
Overlake Hospital Medical Center |
WA | A | Stable | Stand-alone | Upgrade | Based our GRM criteria, credit profile enhanced through merger with MultiCare Health System | ||||||||
Southeast Georgia Health System |
GA | BBB | Stable | Stand-alone | Favorable outlook revision | Improved operating results with general stability in unrestricted reserves after a successful turnaround effort | ||||||||
St Francis Health System |
OK | AA+ | Stable | System | Maintained | Credit quality consistent with existing rating | ||||||||
Thomas Jefferson University |
PA | A | Stable | System | Favorable outlook revision; New sale | Improving operating performance and assessment of merger with Lehigh Valley Health Network | ||||||||
UMass Memorial Health Care |
MA | BBB+ | Stable | System | Maintained | Credit quality consistent with existing rating | ||||||||
UNC Health |
NC | AA | Stable | System | Maintained | Credit quality consistent with existing rating | ||||||||
UNC Southeastern Regional Medical Center |
NC | BB- | Negative | Stand-alone | Downgrade | Uneven operating performance with extremely low DCOH and cash-to-debt metrics | ||||||||
University of North Carolina Rex Healthcare |
NC | AA- | Stable | System | Maintained | Credit quality consistent with existing rating | ||||||||
University of Pennsylvania Health System |
PA | AA | Stable | System | Maintained | Credit quality consistent with existing rating | ||||||||
Valley Health System |
NJ | A | Stable | Stand-alone | Maintained | Credit quality consistent with existing rating | ||||||||
Vanderbilt University Medical Center |
TN | A | Stable | System | Maintained; New sale | Credit quality consistent with existing rating | ||||||||
Virginia Hospital Center |
VA | A+ | Stable | Stand-alone | Maintained | Credit quality consistent with existing rating | ||||||||
DCOH--Days' cash on hand. MADS--Maximum annual debt service. GRM--Group Rating Methodology. *Louisville Medical Center supplies steam and chilled water to users on the Medical Center campus. |
This report does not constitute a rating action.
Primary Credit Analyst: | Blake C Fundingsland, Englewood + 1 (303) 721 4703; blake.fundingsland@spglobal.com |
Secondary Contacts: | Cynthia S Keller, Augusta + 1 (212) 438 2035; cynthia.keller@spglobal.com |
Suzie R Desai, Chicago + 1 (312) 233 7046; suzie.desai@spglobal.com | |
Amy He, New York +1 2124380381; amy.he@spglobal.com |
No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.spglobal.com/ratings (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.spglobal.com/usratingsfees.