Livonia, Mich.-based Trinity Health returned to the black in fiscal year 2024 with an operating income of $68.4 million (0.3% margin) and received a $4 billion financial boost from its disaffiliation of BayCare Health System.
Trinity held a 50.4% interest in Clearwater, Fla.-based BayCare, a nonprofit system formed in 1997 through a joint operating agreement with Trinity, Morton Plant Mease Health Care and South Florida Baptist Hospital in Plant City, Fla.
On May 24, Trinity and BayCare finalized an agreement where BayCare paid Trinity $4 billion in cash, according to financial documents published Oct. 4. Trinity then exited as a corporate member and board participant. To fund the payment, BayCare used $3 billion in cash and took out a $1 billion bridge loan.
The payment significantly boosted Trinity's liquidity metrics. Unrestricted cash and investments improved to $14.7 billion in FY 2024 from $10 billion the prior year, days of cash on hand jumped to 234 from 173.7, and cash to total debt increased to 178.2% from 119%.
"Trinity Health's liquidity and leverage metrics have improved very significantly year over year due in large part to the early termination of a 50-year JOA with BayCare," Fitch Ratings said in a Dec. 4 report shared with Becker's. "Proceeds not only strengthen Trinity Health's balance sheet, but will also allow for more expeditious investment in community division transformation initiatives."
Trinity had about $8.2 billion of total debt outstanding at the end of FY 2024 or 178.2% cash to debt outstanding, compared to 119% last year. Fitch said Trinity's net debt position (debt minus unrestricted cash and investments) is "now very favorably negative at $6.4 billion, one of the strongest net debt positions" in the ratings agency's rated portfolio.
BayCare's new corporate legal structure took effect June 30 and ensured that all of the health system's hospitals, healthcare facilities and services are fully and legally part of BayCare.
"This change to our organization's corporate legal structure, along with our clinical excellence and sound financial standing, places BayCare in the best position to determine its own future and the future of healthcare in the communities we serve," BayCare President and CEO Stephanie Conners said in a July 1 news release. "Our strong position is because of the support of our BayCare Board members, hospitals, team members, physicians, donors and community."
BayCare thrived under the JOA, growing into the region's leading provider and one of its largest private employers. The health system has 32,000 employees serving 16 hospitals and hundreds of other locations.