Moody’s Investors Service has upgraded Allina Health System’s rating by one notch to Aa3 in recognition of its favorable fiscal performance.

The action affects $653 million of debt issued through Minneapolis and the St. Paul Housing and Redevelopment Authority.

The system has seen growth in unrestricted cash and investments, improved debt metrics, and benefits from a strong management team.

The system had operating income of $172 million for a 5.3% margin and a 10.3% cash-flow margin in fiscal 2011.

Unrestricted cash and investments have increased to $1.3 billion from $1.2 billion.

The health care system is the largest in the Twin Cities market with $3.2 billion in annual revenues and it saw more than 109,000 admissions and visits in fiscal 2011.

Health care challenges include operating in a highly competitive markets and revenue pressures due to inpatient volume shifts and declining reimbursement from governmental payers.         

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