Published on May 18th, 20180
St. Luke’s Earns Strong Bond Ratings
St. Luke’s University Health Network has been awarded an A- bond rating by S&P Global Ratings and an A3 rating by Moody’s Investor Services, bucking a downward trend in the nonprofit hospital industry both nationally and locally.
“The ‘A-‘ rating reflects our opinion of SLUHN’s increasing market share in its primary service area, healthy volume growth, and very strong leadership team that has demonstrated operational success and strong project management,” S&P said in its report on St. Luke’s Northampton County General Purpose Authority 2018A and 2018B bonds, as well as to other debt issued in prior years for St. Luke’s.
Moody’s also lauded St. Luke’s leadership, citing its “proven track record of integration and ability to manage multiple strategies.”
“Management has a demonstrated ability to manage multiple initiatives, execute large construction projects and operationalize clinical facilities,” Moody’s said.
Nationally, the ratio of nonprofit hospital and health system credit downgrades to upgrades rose in 2017, according to a recent analysis by Moody’s. There were 41 downgrades and 12 upgrades in 2017 – a higher ratio than in 2008 and 2009 during the height of the economic downturn.
In its assessment of St. Luke’s, S&P said its outlook for St. Luke’s is stable, reflecting “our opinion of SLUHN’s strong enterprise profile and solid and experienced management team. The outlook also reflects the network’s improved operating performance and solid coverage.”
Earlier this year, St. Luke’s merged with Blue Mountain Health System in Carbon County and Sacred Heart HealthCare System in Lehigh County.
“Management has had early success with its turnaround plans at both systems, with a small operating gain at [Blue Mountain],” S&P said. “Management expects continued profitability at [Blue Mountain] and expects [Sacred Heart] to improve to achieve positive earnings in 2019.”
Moody’s said St. Luke’s “broad geographic reach, strong market position as well as size and scope of operations will continue to fuel robust operating momentum as the System’s financial leverage rises.”
In March, St. Luke’s was designated an IBM Watson Health (formerly Truven) 100 Top Hospital for a sixth time and the fourth year in a row – widely regarded as one of the highest honors in the health care industry.