Moody’s Investors Service has revised its outlook on Gundersen Lutheran’s A1 rating to stable from negative in recognition of the hospital system’s strengths and favorable operating performance.

The action affects $272 million of debt and comes ahead of the hospital’s planned $70 million debt issue through the Wisconsin Health and Educational Facilities Authority.

“We believe Gundersen is well-positioned and that the system should be able to leverage its leading market position to sustain current levels of operating cash- flow generation in order to support the additional debt and fund a sizable portion of capital spending through operations,” Moody’s analysts wrote.

The LaCrosse-based system benefits from an $870 million revenue base, a large teaching hospital and a wide breadth of clinical services.

The health care system has seen improved operating performance this year after strong margins over the last three quarters and has experienced steady growth in unrestricted cash and investments to nearly $500 million.

Its challenges include project construction risk, balance-sheet stress from the planned borrowing, and local competition.

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