Moody's
On October 21, 2011, Moody’s Investor Service affirmed the A2 rating on Catholic Healthcare West’s bonds. The affirmation reflects CHW’s good balance sheet position, adequate debt coverage measures, and the system’s strength as a large, multistate health system. Moody’s cites CHW’s improved liquidity position, as well as the additional support from the state of California provider fee, as key credit strengths, as well as the system’s stable and proven management team. Moody’s cites operating pressures, related to high unemployment and poor economic conditions in a number of CHW’s service areas, as well as improved, although still relatively high leverage and debt position, and challenges in managing labor costs, as credit risks. The rating outlook was revised to Negative.
Standard & Poor's
On October 19, 2011, Standard & Poor’s affirmed the ‘A’ rating on Catholic Healthcare West’s bonds. Standard & Poor’s cites CHW’s strength as one of the largest not-for-profit health systems in the country, with significant revenue diversity and a track record of solid cash flow. According to S&P, the improved balance sheet is consistent with a higher rating level, but erosion in CHW’s operating income quality precludes a rating upgrade. Credit concerns include CHW’s concentration in the economically hard-hit states of California, Arizona and Nevada. The rating outlook remains at Positive. Standard & Poor’s notes that an upgrade would be predicated on improved operating results; continued operating challenges, erosion in the underlying operating environment, and/or balance sheet deterioration, would signal a revision of the outlook to Stable.
Fitch
On October 25, 2011, Fitch Ratings affirmed Catholic Healthcare West’s (CHW) rating at A+. The rating affirmation reflects CHW’s strong management practices, improved balance sheet metrics, and adequate, although weakening, operating profitability. The rating is further supported by CHW’s size and geographic diversity. Credit concerns include the ongoing recessionary impact, particularly in California, and the system’s growing reliance on supplemental reimbursement payments. The rating outlook remained at stable.
