The downgrade to “Baa1” from “A3” affected the Kentucky university’s $209 million general receipts bonds. It also assigned the rating a negative outlook.
The university purchased Louisville-based KentuckyOne Health from Chicago-based CommonSpirit Health Nov. 1. The transaction was considered risky because many of the facilities, including Louisville-based Jewish Hospital, need significant upgrades.
“The [downgrade on the] underlying rating reflects increased risk over the next several years as the University integrates recently acquired KentuckyOne Health assets with the U of L Health University Medical Center,” Moody’s said. “These assets, which have had significant operational and financial difficulties in recent years under their former management, come with little liquidity and significant capital needs that add credit challenges.”
University of Louisville’s CFO Dan Durbin told the Louisville Business Journal that the issues raised by Moody’s are valid and the university is working to resolve them.
Some of the efforts include entering a new group purchasing arrangement that will help generate savings and working toward a greater level of operational efficiency.
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