Fitch upgrades STHS credit rating to AA-
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Wednesday, August 25, 2021
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Fitch Ratings has upgraded St. Tammany Health System’s issuer default rating, bumping it to 'AA-' from 'A+'. Fitch also upgraded the long-term rating on the series 2018A and 2018B bonds issued by St. Tammany to 'AA-' from 'A+'.
In an analytical conclusion included with its announcement of the upgrade on Tuesday (Aug. 24), Fitch wrote:
The upgrade to 'AA-' reflects an improved financial profile, with consistently strong operating cash flows that have contributed to solid liquidity growth even in the midst of the coronavirus pandemic. Fitch views St. Tammany's more robust balance sheet, with cash-to-adjusted debt that has grown to above 180%, in conjunction with its long history of strong operating performance, as commensurate with a higher rating category.The rating also reflects St. Tammany's solid market share in a growing service area, as well as the Joint Operating Agreement (JOA) in place between St. Tammany and the Ochsner Clinic Foundation and Ochsner Heath System (Ochsner). Under the agreement, St. Tammany and Ochsner coordinate clinical services and share the combined operating income in the service area. This agreement is for 20 years and has supported consistent volume and revenue growth.
The upgrade to 'AA-' reflects an improved financial profile, with consistently strong operating cash flows that have contributed to solid liquidity growth even in the midst of the coronavirus pandemic. Fitch views St. Tammany's more robust balance sheet, with cash-to-adjusted debt that has grown to above 180%, in conjunction with its long history of strong operating performance, as commensurate with a higher rating category.
The rating also reflects St. Tammany's solid market share in a growing service area, as well as the Joint Operating Agreement (JOA) in place between St. Tammany and the Ochsner Clinic Foundation and Ochsner Heath System (Ochsner). Under the agreement, St. Tammany and Ochsner coordinate clinical services and share the combined operating income in the service area. This agreement is for 20 years and has supported consistent volume and revenue growth.
Fitch’s full assessment of St. Tammany Health System – known formally as St. Tammany Parish Hospital Service District No. 1 – can be found at FitchRatings.com.
Founded in 1914, Fitch Ratings is one of the “Big Three” credit ratings agencies nationally recognized by the Securities and Exchange Commission. The others are Moody’s and Standard & Poor’s.