Moody’s has upgraded the revenue bond rating of Baton Rouge, La.-based Franciscan Missionaries of Our Lady Health System “to A1” from “A2,” citing strong operating cash flow and robust liquidity.
Six things to know:
1. The credit outlook remains positive at the higher “A1” rating, supported by FMOLHS’s durable cash flow and liquidity profile. The system has $914 million in direct debt outstanding.
2. Moody’s expects FMOLHS to maintain operating cash flow margins of 9% to 10% in fiscal 2026, driven by disciplined labor and efficiency efforts, as well as state Medicaid supplemental funding.
3. FMOLHS is launching a multi-year strategic plan aimed at expanding market presence and clinical offerings. While capital spending will rise, Moody’s expects it to remain manageable relative to cash flow, preserving strong liquidity and leverage ratios.
4. The system benefits from leading market share in Baton Rouge and a strategic partnership with Louisiana State University. Its flagship facility, Our Lady of the Lake Regional Medical Center, is the region’s only Level I trauma center and serves as a key academic and care hub.
5. Moody’s flagged challenges such as high reliance on government payers and supplemental funding, significant market competition, and operational pressures in non-core markets.
6. A further ratings boost would depend on maintaining cash flow margins above 7% and liquidity levels with around 250 days cash on hand and 300% cash to debt. A downgrade could result from sustained margins below 5% or a decline in liquidity below 180 days cash on hand.
