Below is a summary of some of the credit ratings assigned during 2022 to the top 10 healthcare companies in terms of the amount of hospitals they operate. The hospital groups are listed alphabetically.
Ascension (St. Louis)
The 144-hospital system's "national size and scale with a significant market presence in several key markets, which produce unique credit features not typically seen in the sector" is the main reason behind its rating of "AA+" for both its overall debt outlook and on various bonds it holds in the amount of approximately $7 billion, Fitch said in September. Ascension's larger markets include ministries in Texas, Tennessee, Indiana, Michigan and Florida.
Baylor Scott & White (Dallas)
A series of Baylor Scott & White Health bonds were assigned "Aa3" ratings by Moody's in October. At the same time, "Aa3/P-1" ratings on the group's debt ($4.1 billion fiscal year end 2022) were affirmed.The stable outlook reflects the strength of BSWH's management structure and discipline and expected maintenance of strong margins, which will provide resources to execute expansion strategies and manage industry challenges, Moody's said.
Christus Health (Irving, Texas)
Christus was assigned an "A+" rating in July on over $323 million of bonds by Fitch Ratings. The group was also assigned "A+" for its overall Issuer Default Rating with a stable outlook. The positive ratings reflect a strong financial profile, multi-state and multi-country presence, and an expectation that Christus will continue to execute on its strategic growth plans and maintain strong operating margins and unrestricted liquidity levels, Fitch said.
CommonSpirit (Chicago)
S&P Global Ratings affirmed in September its "A-" long-term rating and underlying rating on various series of bonds issued for CommonSpirit. The ratings reflect what the agency called the hospital group's "exceptionally broad geographic reach, supporting a financially diversified health system across 21 states with a large revenue base of nearly $34 billion." The rating was also informed by the system's strategic plan to help position itself as a national leader in the changing healthcare landscape, S&P said.
Community Health Systems (Franklin, Tenn.)
Fitch Ratings affirmed the long-term Issuer Default Ratings of Community Health Systems at "B-" in August. In addition, the agency affirmed the ratings on the company's senior secured notes and asset-based loan facility at "BB-"/"RR1," junior-priority secured notes at "CCC"/"RR6" and senior notes at "CCC-"/"RR6." The rating outlook was revised to negative from stable, reflecting a deterioration in operating performance in the first half of 2022 with significant increases in labor costs and weakness in volumes as well as acuity mix driving a downturn in the company's revenue and margin levels, Fitch said.
HCA Healthcare (Nashville, Tenn.)
In May, Fitch Ratings affirmed the Issuer Default Rating of HCA Healthcare at "BB+." In addition, Fitch downgraded the ratings of HCA's legacy senior secured notes to "BB+"/"RR4" from "BBB-"/"RR2," in line with all existing HCA senior unsecured debt and the IDR. The favorable operating profile as the largest for-profit operator of acute care hospitals in the U.S. helps HCA maintain its leading profitability despite headwinds to organic operating growth, Fitch said.
Lifepoint Health (Brentwood, Tenn.)
While its outlook was revised to negative from positive, the affirmation of various ratings reflected Moody's view that LifePoint Health will continue to face headwinds that will keep leverage elevated for the next 12 to 18 months, but should see leverage improvement as volumes improve and labor pressures subside later in fiscal years 2023 and 2024. The ratings affirmed in November include the "B2" corporate family rating, the "B2-PD" probability of default rating, the "B1" senior secured ratings and the "Caa1" senior unsecured ratings.
Providence (Renton, Wash.)
Moody's downgraded the ratings on Providence revenue bond debt to "A1" and "A1/VMIG1" from "Aa3" and "Aa3/VMIG1" in April. Total debt outstanding, following the disaffiliation with Newport Beach, Calif.-based Hoag Hospital, is $6.3 billion. The outlook is stable.
The downgrade to "A1" was driven by the disaffiliation with Hoag Hospital and the expectation that weaker operating, balance sheet and debt measures will continue for the time being. Additional challenges include pressure from payers, exposure to labor unions, material competition in many markets, the reliance on temporary labor, and persistent underperformance in certain markets, including the Puget Sound and Southern California markets, Moody's said.
Tenet Healthcare (Dallas)
In June, Moody's assigned a "B1" rating to Tenet Healthcare's offering of $1.8 billion of senior secured first lien notes due 2030. The outlook remains stable, reflecting Moody's view that Tenet will continue to operate with significant scale and diversity over the next 12 to 18 months while maintaining moderately high financial leverage. The stable outlook also incorporates Moody's expectations that the company is likely to utilize free cash flow to fund acquisitions. In March 2022, the hospital group was overall upgraded by Fitch Ratings to "B+" from "B" with a stable outlook.
Trinity Health (Livonia, Mich.)
Fitch Ratings affirmed Trinity Health's Issuer Default Rating and rating on bonds at "AA-" in December. The group has approximately $6.9 billion in outstanding rated debt, and the rating outlook is stable. The long-term ratings also incorporate Fitch's expectation that Trinity Health will return to sustained stronger operating EBITDA margins notwithstanding their fiscal 2022 results which reflected the sector-wide struggle with salary/wage/benefits expense increases and contract labor costs, on top of inflationary pressures.