Dallas-based Tenet Healthcare’s credit rating was upgraded to “Baa2” from “Baa3” by Moody’s.
The upgrade reflects Tenet’s sustained deleveraging driven by a combination of earnings before interest, taxes, depreciation and amortization growth and substantial debt reduction over the past two years, Moody’s said in its June 4 report.
Moody’s said it expects the publicly traded for-profit health system will continue to grow its revenue and EBITDA through the expansion of its ambulatory care business, United Surgical Partners International.
Tenet’s rating also reflects its significant scale, good business diversity, moderately high financial leverage and good liquidity, Moody’s said. In addition to its acute care hospitals and sizable ASC portfolio, Tenet also operates revenue cycle management company Conifer Health Solutions.
In February, it was announced that Tenet would regain full control of Conifer as Chicago-based CommonSpirit exits the partnership. Under the agreement, CommonSpirit will pay about $1.9 billion to Tenet over the next three years, while Conifer will pay CommonSpirit roughly $540 million to redeem its 23.8% equity stake, effective Jan. 1. Conifer will continue to provide service for CommonSpirit through the end of 2026. Tenet expects to compensate for the lost business by expanding RCM services with other customers, including new ones, according to Moody’s.
Tenet has a stable outlook at its new rating.
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