UofL Health maintains solid rating even as debt levels remain elevated

Louisville, Ky.-based UofL Health has had its long-term credit rating and that on a series of bonds affirmed at "BBB+" amid a strong local market share but higher-than-average debt levels, Fitch Ratings said Feb. 23.

The seven-hospital system's outlook is stable, reflecting expectations that UofL Health will strengthen its balance sheet as new capacity comes online, Fitch said. Total debt at the end of fiscal 2022 amounted to $559 million, Fitch said.

That capacity, including capital projects such as the system's $186 million patient tower expansion, will ensure elevated expenditure for now, however, Fitch added.

And while the system has a solid track record of sound operating margins that are likely to improve over time, short-term concerns remain.

"Operating margins are pressured in interim fiscal 2023 (2.5 percent operating EBITDA margin through six months), however, as labor pressures continue to persist," Fitch said.

UofL Health faces competition in the Louisville-area market from other prominent health systems, which include higher-rated Norton Healthcare and Baptist Health, both Louisville-based and rated at "A+."

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