Fitch Ratings affirmed its "BBB+" rating on Englewood, Colo.-based Catholic Health Initiatives and removed the health system from rating watch evolving, affecting $5.7 billion of outstanding debt.
Additionally, Fitch affirmed the short-term "F2" rating on $912 million of debt supported by CHI's self-liquidity. The short-term affirmation is a result of CHI's sufficient liquidity.
The resolution of rating watch evolving is a result of CHI entering into a definitive agreement to combine operations with San Francisco-based Dignity Health and Fitch's expectation that the health system will see improved operating performance in fiscal year 2018, following years of low cash flow and large operating losses.
The long term rating affirmation is a result of several positive and negative factors, including CHI's fifth consecutive year of operating losses in fiscal year 2017, elevated debt metrics and stronger start to fiscal year 2018. CHI's stronger start to fiscal year 2018 reveals improved operations in the unaudited five month results through November.
The outlook is stable.