Moody's Investors Service upgraded Cooper Health System, N.J., bonds to Baa2 from Baa3 on Aug. 11. The upgrade affects $250 million in outstanding bonds.

Moody's analysts Sarah Vennekotter and Jennifer Ewing noted that the system' operating cash flow margin has been improving. In fiscal year 2013 it was 7.2% and in the first six months of fiscal year 2014 it was 8.6%.

The analysts also said that unrestricted cash and investments increased to $272 million, or 120 days of cash on hand, at the end of fiscal year 2013 from $264 million, which was 123 days of cash on hand, at the end of fiscal year 2012.

Finally, Cooper had a 1% increase in inpatient admissions and 17% increase in observation stays in fiscal 2013 from the previous year, they said.

For challenges, the analysts said that Cooper is modestly leveraged with 4.7 times debt to cash flow.

The analysts also pointed out that 20% of its patients use Medicaid for payment. Other patients get charity care. New Jersey state government provides subsidies for the charity care. However, the analysts said there is uncertainty about the state's continuation of these subsidies into the future.

Moody's has a stable outlook on the new rating.

Cooper Health System bonds were issued through the Camden County Improvement Authority.

"We are pleased with the bond upgrade received from Moody's Investors Service today," said Douglas Shirley, chief financial officer for Cooper Health System. "Cooper's financial performance has strengthened over the past several years as we strategically expanded key service lines, recruited top physicians and established partnerships, such as the MD Anderson Cancer Center at Cooper, leading to a steady increase in patient admissions. As the tertiary health care system of choice for the southern New Jersey region, we provide the highest level of patient care, enabling us to leverage our solid business position for continued expansion to meet the growing health care needs of our community."

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