Sparrow Health sees credit rating improve after U of Michigan merger

Lansing, Mich.-based Sparrow Health System was removed from CreditWatch status following the successful completion of its tie-up with Ann Arbor-based University of Michigan Health, S&P Global said May 16.

Sparrow Health, a six-hospital system, has also shown operational improvement in the first quarter and is expected to sustain such improvement, S&P said in support of the CreditWatch change. System bonds were affirmed at "A-," and the outlook is positive.

Sparrow Health saw its operating losses halved to $25.2 million in the first quarter compared with two straight quarters of $50 million operating losses.

The University of Michigan closed the acquisition of Sparrow Health April 3 to create a $7 billion joint system.

 "We believe the affiliation will be accretive to Sparrow, providing brand recognition, development of strategic growth, and increased operational efficiencies," S&P said. "However, we expect this accretion could take time, as the affiliation is still in its infancy."

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