Moody's Investors Service said it has upgraded the bond rating for Advocate Sherman Hospital, Ill., to Baa1 from Baa2.
The outlook is stable.
The upgrade reflects the benefits from Sherman's level of integration with rated Advocate Health Care Network.
The upgrade reflects realized and expected benefits from the hospital's high degree of consolidation and integration with Advocate Health Care Network (rated Aa2) and growth in investments over the last several years. Although Sherman is budgeting a notable margin decline in 2014, Moody's expects margin improvement and cash growth beyond 2014 as Sherman consolidates contracting, physician recruitment and patient care systems with Advocate and realizes a $200 million five-year capital and operating commitment from Advocate.
In addition to the factors noted above, the Baa1 rating reflects Sherman's high leverage and weak debt measures as well as competitive service area. Positive factors include market share growth and no debt structure risks with all fixed rate debt.
