Moody's Investor Service revised the outlook for Advocate Aurora Health's outstanding debt outlook from "positive" to "stable."
"The revision of the outlook to stable from positive reflects Moody's view that AAH's operating cash flow (OCF) margin will not likely rebuild to pre-COVID levels, as anticipated in fiscal 2023, following moderation in fiscal 2022, due to labor challenges and general inflation as well as uneven volume recovery," Moody's said in an Oct. 18 statement.
In the revised outlook, Moody's noted Advocate Aurora's financial profile will likely remain solid, and there is a potential for near-term challenges as the health system focuses on transactional growth.
Moody's affirmed its "Aa3" long-term rating, which reflects the Milwaukee and Downers Grove, Ill.-based health system's scale and geographic reach, centralized governance and IT model, and sound balance sheet resources, according to the statement.
"AAH's leading market positions across two regions, business line breadth and strong financial discipline will be integral to ongoing recovery as the system pursues transactional growth," Moody's said.
The report also noted Advocate Aurora's operating and balance sheet leverage is likely to stay comparable to peer health systems. At the end of the 2021 fiscal year, Advocate Aurora had about $3.5 billion of outstanding debt.