At least 12 hospital and health system credit rating upgrades and downgrades have occurred in the last six months.
Upgrades
Antelope Valley Healthcare District (Lancaster, Calif.) — raised in October 2021 from "Ba3" to "Ba2" (Moody's Investors Service)
"The upgrade to 'Ba2' reflects recent positive developments and acknowledges several fundamental strengths of the organization that will enable it to continue generating good financial performance and adequate balance sheet metrics," Moody's said. "Key positive developments supporting the higher rating include modest patient volume disruption and stable financial performance throughout the pandemic while maintaining stronger liquidity metrics, excluding Medicare advances."
Baptist Healthcare System (Louisville, Ky.) — raised in January from "A2" to "A1" (Moody's Investors Service); raised in January from "A" to "A+" (Fitch Ratings)
"The upgrade to 'A1' is driven by expected durability of strong margins and liquidity, which will be supported by revenue growth and diversification strategies as well as demonstrated discipline around cost management and capital spending," Moody's said.
CommonSpirit Health (Chicago) — raised in November 2021 from "BBB+" to "A-" (S&P Global Ratings)
"The rating action reflects successful execution of several aspects of CommonSpirit's initial strategies in stemming losses and setting the system up for stability, as well as a significantly strengthened balance sheet that provides the organization some cushion for operations that we expect to be at near break-even levels in fiscal 2022," S&P Global Ratings said.
Gainesville (Texas) Hospital District — raised in October 2021 from "Ba1" to "Baa2" (Moody's Investor Services)
"The upgrade of the issuer rating to 'Baa2' reflects the District's materially improved credit position following its bankruptcy exit in late 2018, reflecting a different operating structure and a now established trend of positive operations under a new hospital manager," Moody's said in a news release. "The Baa2 rating also considers a large and growing tax base, manageable debt profile, significant tax rate flexibility and lack of pension liability."
Erlanger Health System (Chattanooga, Tenn.) — raised in October 2021 from "Baa3" to "Baa2" (Moody's Investors Service)
"The upgrade to 'Baa2' reflects Moody's expectation that Erlanger Health System will sustain the improved operating margins demonstrated across the past two years, driven by management's execution of a robust performance improvement plan," the credit rating agency said. "The improvement in cash flow and lower capital spending in the past two years has led to solid growth in liquidity."
NYU Langone Health (New York City) — raised in January from "A3" to "A2" (Moody's Investors Service)
"The upgrade to 'A2' reflects continued extensive growth initiatives and expense controls which will continue to translate into robust margins and significant cash flow that will provide a cushion for anticipated large capital spend over the next several years," Moody's said.
St. Joseph's/Candler (Savannah, Ga.) — raised in October 2021 from "A3" to "A2" (Moody's Investors Services)
"The upgrade to 'A2' reflects Moody's expectation that the durable improvement in operating performance and strong organic revenue growth will continue, supported by disciplined growth strategies in and around the Savannah market and ongoing expense reduction initiatives," Moody's said. "SJ/C will continue to expand patient access points highlighted by the upcoming construction of an outpatient campus in Richmond Hill, Ga., a sizable medical office building in Bryan County and expansion of oncology services at the Bluffton, S.C., campus over the next three years."
Temple University Health System (Philadelphia) — raised in December 2021 from "BB+" to "BBB" (Fitch Ratings)
"The two-notch upgrade to 'BBB' on Temple's IDR and revenue bond rating is based on improved profitability in the most recent two fiscal years, and more significantly, the material increase in TUHS's liquidity metrics resulting from the sale of its interest in Health Partners, which yielded approximately $300 million," the credit rating agency said. "The upgrade to an investment-grade rating level is driven by the vastly improved financial profile metrics."
Downgrades
Adventist Health (Roseville, Calif.) — lowered in September 2021 from "A+" to "A" (Fitch Ratings)
"The one-notch downgrade to 'A' reflects Adventist's historically solid operating income levels, which have more recently, through a series of one-time events and the lingering deleterious impact from the novel coronavirus, resulted in lower than anticipated operating earnings before interest, taxes, depreciation and amortization margins," Fitch said. "Strength of the credit is still conferred through Adventist's position as the leading acute care provider in multiple growing markets, a gradually improving balance sheet, and accretive affiliation and expansion activity."
Catholic Health System (Buffalo, N.Y.) — lowered in October 2021 from "Baa2" to "Ba2" (Moody's Investors Service); lowered in November 2021 from "BBB" to "BB+" (S&P Global Ratings)
"The magnitude of the downgrade to 'Ba2' reflects the escalation since earlier this year of material and simultaneous challenges facing CHS," Moody's said. "The confluence of the continuing severe impact of the pandemic in Western New York on CHS's volumes and significant labor costs, exacerbated by the expense and disruption of an ongoing nursing strike, are both social risks under Moody's [environmental, social and governance] classification."
Delta County Memorial Hospital (Delta, Colo.) — lowered in November 2021 from "BB" to "CCC+" (S&P Global Ratings)
"The lower rating and negative outlook reflect our view of DCMH's unsustainable financial trajectory due to its rapidly declining cash, the filing of two waivers due to debt service coverage covenant violations in 2019 and 2020, as well as operating losses and underlying cash declines continuing through interim 2021," said S&P Global Ratings credit analyst Blake Fundingsland. "The negative rating action is also driven by our view of DCMH's increased governance risks under our environmental, social and governance — or ESG — factors assessment due to its poor risk mitigation culture related to management as well as the board's unwillingness and/or lack of progress in resolving the waivers to eliminate debt acceleration risk."
Marin General Hospital (Greenbrae, Calif.) — lowered in September 2021 from "BBB+" to "BBB" (Fitch Ratings)
"The downgrade of MH's revenue bond rating ... is driven by weak balance sheet metrics and financial profile due to multiple years of low operating cash flow generation that have fallen short of levels needed to prevent significant cash deterioration," Fitch said. "Operating cash flow constraints reflect the confluence of large capital spending at a time that was complicated by a material decline in utilization during the pandemic and before the hospital had an opportunity to implement meaningful cost control measures."