LOS ANGELES — Moody's Investors Service revised its outlook from stable to positive on Beverly Hills, Calif.-based Cedars-Sinai Medical Center's long-term revenue bonds.
It affirmed its A1 rating for the bonds. The outlook change affects $1.08 billion in debt.
The revised outlook reflects Moody's "expectation that Cedars-Sinai will continue generating above average operating performance that will allow the organization to steadily deleverage and maintain or improve debt service coverage levels."
Cedars-Sinai, a teaching hospital that boasts the largest academic center in California, is an 865-bed general medical and surgical facility.
Among the strengths Moody's cited were that the hospital maintains a 4% share, the highest in the fragmented West Los Angeles market. It also has very strong operating metrics, according to Moody's analysts, with operating cash flow margins averaging 14% over the last five years and reaching 16.3% in 2014.
Cedars-Sinai has a conservative 100% fixed rate debt structure with no derivatives, according to the report.
The pension is nearly fully funded and comprehensive debt measures are in line with direct debt measures. Fundraising totaled nearly $255 million over the past three years.
Moody's attributed the affirmation to multiple factors including the organization's large size and strong reputation for clinical services and research, excellent financial performance and strong and improving balance sheet metrics.
Among the hospital's challenges are that affordability and patient access may become strategic issues as the insurance market changes and patients become more price sensitive or narrow networks seek to exclude the hospital, but analysts said the hospital is taking steps to address these issues.
