CHICAGO - Fitch Ratings Jan. 27 upgraded Rush University Medical Center's debt by one notch to A-plus in recognition of the Chicago institution's consistently strong profitability.
The action impacts more than $550 million of debt issued in 2006, 2008, and 2009 through the Illinois Finance Authority. A stable outlook was assigned. The system's debt is secured by a pledge of the gross revenues of the obligated group and a mortgage on certain property of the obligated group.
"The rating upgrade to A-plus reflects Fitch's expectation that Rush will sustain historical profitability levels thereby maintaining coverage metrics at levels consistent with the rating and allowing for further growth in unrestricted liquidity given Rush's decreased capital spending levels going forward," Fitch wrote.
Operating profitability has been consistently strong, exceeding Fitch's A category medians with operating margins averaging 12.4% since fiscal 2008 and improving to 13.6% in fiscal 2013, analysts wrote.
Rush's moderate debt burden and increased profitability resulted in "robust" maximum annual debt service of 4.4 times in fiscal 2013. Unrestricted cash and investments have increased $275 million since fiscal 2012 reflecting strong cash flow, reduced capital spending and monetization of certain assets.
Rush's $1.1 billion overhaul of its main campus on Chicago's near west side is mostly complete and reduced capital spending levels going forward should further improve the system's liquidity, Fitch said.
Rush operates an academic medical center and two community hospitals in Chicago and the surrounding suburbs with a total of 1,237 licensed beds and total operating revenues of $1.8 billion in fiscal 2013.
