Baptist Health ratings affirmed by both Moodys and Fitch

Baptist Health. March 23, 2023

Baptist Health ratings affirmed by both Moody’s, Fitch

Baptist Health high ratings were recently affirmed with an A1 assigned by Moody’s Investor Service, and an A+ from Fitch Ratings.

“The affirmation of our ratings reflects our historically strong operating performance, and that we’re moving in the right direction,” said Baptist Health CFO Rick Carrico. “Baptist Health performed better than the industry average in 2022 which saw 70% of US hospitals post operating losses. And despite Congress voting to end the public health emergency, the healthcare industry continues to experience strong economic headwinds fanned by the pandemic’s inflationary aftermath.”

Moody’s and Fitch Ratings both listed Baptist Health’s outlook as stable.

“The system’s position as Kentucky’s largest, advanced technology capabilities, and the Baptist Health Medical Group, are positives that support our continued efforts to expand services and better serve our communities through improved access for our patients,” said Gerard Colman, Baptist Health CEO.

Among the positive points noted by both rating agencies are Baptist Health’s plans to spend on average about $360 million in each of the next five fiscal years to support major projects already underway, including:

• Baptist Health Hardin – 282,000-square-foot medical pavilion including comprehensive cancer care, surgical suites and physician offices.
• Baptist Health Lexington – 129-acre campus at Hamburg that includes an Ambulatory Surgery Center, Emergency Department, Cancer Center, and multi-story physician office complex.

The rating agencies also gave a thumbs up to Baptist Health’s plans to issue $200 million in commercial paper launched on April 6 and to be used for “general corporate purposes.” Fitch Ratings has assigned a short-term rating of 'F1+' while Moody’s assigned a P-1 rating – its best short-term liability rating.

Both agencies also expressed confidence that Baptist Health’s operating margins will return to previously strong levels over the next several years, with continued revenue growth. As with many businesses, including healthcare, the largest challenges are reining in supply chain and labor costs, primarily in curbing use of agency staff, and ensuring adequate reimbursement is retained from insurers for the high quality care provided. 

Baptist Health’s operating revenue is about $4 billion a year, with favorable results reported from hiring additional providers for the Baptist Health Medical Group, growing outpatient services and retail pharmacies at each hospital.