Health

Announced issuance of CommonSpirit Health bonds for $1.5 billion


CommonSpirit Health has issued a pair of bonds that aim to raise $1.5 billion to cover past and future expenses.

Chicago-based CommonSpirit will use the proceeds to refinance previous debt, repay prior capital expenditures and fund general corporate purposes, according to documents obtained by the system. Catholic health nonprofit announced Friday.

Kevin Holloran, senior director at credit rating agency Fitch Ratings, says large institutions often refinance when short-term payments — the lump sum that includes all outstanding debt — are in the pipeline. come close. In a bear market, CommonSpirit would not want to liquidate the cash to make those payments, he said.

“It didn’t really impact their total outstanding debt,” Holloran said.

Lisa Zuckerman, senior vice president of strategic investments and health systems treasury, said CommonSpirit typically enters the bond market every one to three years during a call with investors on Wednesday. Three.

The debt issuance gives CommonSpirit a stepping stone on its balance sheet in a “punishment environment,” Zuckerman said. The health system reported a net loss of $1.85 billion for fiscal year 2022 last month, ending the year with a negative operating margin. However, the company added $260 million in additional net income in the first half of this year, after the Centers for Medicare and Medicaid Services approved a California policy designed to help hospitals treat Medicaid enrollees and uninsured patients.

Despite recent losses, CommonSpirit’s balance sheet has shown strength over the years, and its financial problems are focused on labor costs rather than revenue issues, Holloran said.

Earlier this month, Fitch upgraded CommonSpirit’s debt to A- with a stable outlook. S&P Global Ratings and Moody’s Investors Service give the company A- and Baa1 ratings, respectively.

A recent Moody’s report noted the benefits of CommonSpirit’s size and diversification in delivery services and care delivery options.

“This is a really great vote of confidence in the power of CommonSpirit to accomplish so much of what we hope to do through the merger” of the Catholic Health Initiative and Dignity Health in 2016. 2019, Zuckerman said during the investment call.

CommonSpirit plans to grow. Upcoming projects include a new patient tower at the California Hospital Medical Center in Los Angeles, expansion of home care locations in California, and a partnership with Kindred Behavioral Health to build an inpatient facility at St. Joseph’s Westgate in Glendale, Arizona.

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