Moody’s Upgrades UC Health’s Outlook

Cincinnati, OH—June 9, 2015— UC Health has received a positive evaluation of its financial and operational strength as Moody’s Investors Service, one of three major bond-ratings agencies in the United States, upgraded its outlook to positive from stable.

Moody’s affirmed UC Health’s A3 rating, citing UC Health’s strong financial performance, growth and an expectation that this trend will continue. The report cited the system’s position in the market as a key strength, noting “The UC Health system provides essential services as the region’s only academic medical center and draws patients from out of the region for complex quaternary cases.”

Richard P. Lofgren, MD, president and chief executive officer of UC Health, said “We are extremely gratified that Moody’s recognizes that as the region’s only academic health system, we are uniquely positioned to serve the Greater Cincinnati community and beyond. From focusing on patient outcomes and satisfaction to caring for the sickest of the sick and for vulnerable populations, we are improving our care for our patients every day.”

“Our long-term strategies along with the successful integration of our governance and clinical operations as well as our strong and productive partnership with the University of Cincinnati and the UC College of Medicine, enable us to make the necessary investments to remain the premiere provider of advanced specialty care in this region,” Dr. Lofgren added.

Contributing factors for the upgrade include improved operating margins in FY 2014 and through nine months of FY 2015, driven by strong revenue growth. UC Health’s operating cash flow margin was 8.4% and 8.8% in FY 2014 and through nine months FY 2015, respectively. Revenue growth has been very strong at 9-10%, driven by volume increases discussed above, physician recruitment and higher acuity.

The Moody’s report cited the following strengths for the UC Health system:

• Prominent role in the greater Cincinnati area as the only academic medical center in the region and the primary teaching hospital for the University of Cincinnati with good volume and market share gains;

• Very strong revenue growth of 9-10%, driving improving operating margins;

• Relatively moderate debt level and improving debt metrics, with favorably low 2.4 times debt-to-cash flow and strong maximum annual debt service coverage of 6.5 times, based on annualized nine-month FY 2015 results;

• Limited debt structure risks with all fixed rate debt ;

• Manageable capital spending expected over the next several years and no plans for new debt.

Dr. Lofgren concluded, “We continue to move forward securing the financial health of the institution, with necessary capital projects to improve our system, and positioning it for success, now and in the future.”

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