Fitch revises UPMC's outlook after 'challenging 2023 results'

Fitch Ratings has affirmed UPMC's issuer default and revenue bond ratings as "A" and revised the Pittsburgh-based health system's outlook from positive to stable. 

Five things to know:

1. The rating affirmation is based on UPMC's leading market share position in its core markets of western Pennsylvania, Fitch said in a March 19 news release. It also reflects the system's revenue diversity across several markets in Pennsylvania, western New York and northwestern Maryland.

2. The rating is further supported by UPMC's large insurance division, which accounted for 55% of the consolidated system operating revenues in fiscal 2023 and provides a certain level of revenue predictability, according to Fitch. 

3. Fitch said the outlook revision from positive to stable is based on "challenging 2023 results." UPMC reported a $198 million operating loss (-0.7% margin) last year, down from a $162 million gain (0.6% margin) in 2022.

4. The 40-hospital system appointed Frederick Hargett executive vice president and CFO, effective Oct. 1, and is focused on turning operations back to a positive territory. 

5. UPMC forecasts an operating EBITDA margin of 3.6% in 2024 and expects that its budgeted operating results will be maintained over the longer term.

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