Moody’s Investors Service this week affirmed OhioHealth’s Aa3 rating but revised its outlook to positive from stable in recognition of the system’s strong and improving balance sheet despite ongoing competitive challenges in its Columbus market. The action affects a total of $631 million of outstanding debt. Analyts said the credit’s strengths include five years of very strong operating margins averaging 5% and operating cash flow margins averaging 12%, which provide an average peak debt service coverage of seven times. Moody’s said the nonprofit system’s balance sheet continues to improve, with liquidity growing over the last four years to a strong 258 days cash on hand. The system holds a leading 43% market share in the greater Columbus area despite competition and has a manageable capital program. Its management team also has a good track record of sustaining good operating margins in recent years and acting swiftly to meet operational challenges.OhioHealth’s greatest challenge is posed by the competitive market, according to analysts. The system also faces challenges in its ability to absorb startup losses associated with a new hospital opening in fiscal 2008.“OhioHealth’s balance sheet is strong and we believe a manageable capital program and good cash flow suggest that the balance sheet will remain strong,” analysts wrote. The system serves 46 counties and includes seven hospitals, ambulatory centers, home care companies, and long-term care facilities.
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