Bonds

Moody’s Investors Service upgraded southern New Jersey’s Cooper Health System to A3 from Baa1.

The action affects about $312 million of debt. The outlook, previously positive, is stable at the new, higher rating.

The upgrade comes as the nonprofit hospital operator, marketed as Cooper University Health Care, begins to carry out a $2 billion ten-year capital plan.

“Capital spending will increase considerably over the next several years which underscores the need to sustain solid margins,” the rating agency said. “We expect Cooper will continue to be a leading provider of tertiary and quaternary services for the southern New Jersey market.”

Cooper Health currently operates a 635-bed hospital, a level I trauma center, a cancer treatment center, a pediatric hospital, and over 100 outpatient offices. It netted $1.8 billion in revenue last year.

In September, hospital officials announced a $2 billion plan to build three new state-of-the-art medical buildings on its Camden campus, financed with municipal bonds, in the largest such development agreement in the city’s history.

“Operating margins will be upheld with ongoing execution of the system’s performance management improvement plan,” Moody’s said, adding that “the system’s strong brand equity will be further broadened through key partnerships.”

Several partnerships between Cooper and other medical institutions, including a care agreement with the University of Texas MD Anderson Cancer Center, are helping to prepare the health network to face a competitive market, Moody’s said.

Cooper is also in the midst of a merger with the Cape Regional Health System based in Cape May, New Jersey in an agreement announced in December.

The Moody’s rating and upgrade of Cooper does not take the merger into account. “We will continue to evaluate the impact of that merger on Cooper’s rating as it progresses,” Moody’s said.

The Cape Regional Health System operates several hospital and outpatient facilities but is much smaller than Cooper Health, netting $140 million in revenue in 2021.

Like other smaller health systems, the CRHS is finding it “more and more challenging to operate independently,” said Garry Gilbert, chairman of the Cape Regional board of trustees, in a statement announcing the merger.

“Merging with Cooper made the most sense as we share the same commitment to the communities we serve and to providing the highest quality care to our patients,” he said.

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