CHICAGO - Moody's Investors Service revised the outlook on Aurora Health Care Inc.'s A3 rating to positive from stable in recognition of its improving performance.
The action taken Thursday impacts $1.3 billion of outstanding debt issued through the Wisconsin Health and Educational Facilities Authority.
The system plans to remarket about $65 million in outstanding bonds from a 2009 issue to address a mandatory tender, swapping to a three-year fixed rate put bond structure, which was incorporated into the rating review, Moody's said.
"The affirmation of the A3 rating is based on audited fiscal 2013 results which shows elevated levels of performance and continues a long track record of profitable operations," Moody's wrote. The credit also reflects Aurora's size and cash flow diversification, strong and growing market position, and proven business strategy and manageable capital spending.
"The positive rating outlook reflects a gradual but persistent strengthening of the organization, as evidenced by increasing margins, improved balance sheet profile overall and healthier debt coverage ratios," Moody's wrote.
Moody's said an upgrade could be in store if the organization is able to sustain current operating momentum, with margins that meet or exceed A2 medians, continues to reduce balance sheet leverage, and maintains a solid market position.
The system 15 acute care hospitals generated more than $4.2 billion in revenue with 99,881 inpatient admissions in fiscal 2013. Its market share in southeastern Wisconsin was "notable" at a growing 38%, Moody's said.
