CHICAGO – Moody's Investors Service has revised the University of Chicago Medical Center's outlook to stable from negative thanks to two years of stronger operating margins.

The rating agency affirmed the medical center's Aa3 rating on $693 million of rated debt sold through the Illinois Finance Authority.

The revision "reflects UCMC's notable improvement in operating margins in fiscal 2014 and fiscal year 2015," Moody's wrote in its Nov. 12 report.

The rating is supported by UCMC's strong relationship with the Aa2-rated University of Chicago, maintenance of good cash on hand, and favorable volume and market share growth in recent years. UCMC continues to be comparatively highly leveraged and its debt ratios are thin at the Aa3 rating.

The medical system could win an upgrade with continued material improvement in its operating margins, a pay down of debt leading to significantly stronger debt coverage ratios, stronger liquidity ratios, and more explicit support by the university.

Alternatively, the rating could fail if the medical system fails to sustain improved operating cash flow margins, it experiences a notably weakening of liquidity ratios, or its relationship with the university weakens.

UCMC is a large comprehensive acute medical center with 641 staffed beds located on Chicago's south side on the campus of the University of Chicago. The university is the sole corporate member of UCMC.

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