Moody's Affirms St. Charles Health System's A2 Revenue Bond Rating

Strategic Insights -

St. Charles Health System, Oregon's (SCHS) dominant healthcare system, is expected to show modest overall improvement in fiscal 2025, with significant improvement achieved in fiscal 2026, reaching an operating cashflow margin of over 6%. This affirmation of the A2 rating and maintenance of the stable outlook reflect SCHS's strong market position, comprehensive clinical offerings, and favorable location in central Oregon. The system's strong balance sheet will continue to provide support, despite a significant miss to budget in 2024 due to legislation and workforce costs.

Key Takeaways:

  • Moody's has affirmed SCHS's A2 revenue bond rating, with a stable outlook, reflecting the expectation of modest overall improvement in fiscal 2025 and significant improvement in fiscal 2026.
  • SCHS has approximately $384 million of debt outstanding and plans to significantly increase capital spending to over two times depreciation over the next five years.
  • The system's strong balance sheet will continue to provide support, with liquidity expected to decline but remain robust at over 200 days.
  • SCHS's financial performance will be driven by multi-year improvement strategies, including enhanced revenue capture, specialty volume growth, additional workforce stabilization, and other operating efficiencies.
  • The system's market position, clinical offerings, and favorable location will continue to fuel strong revenue growth.
  • SCHS has generated $1.2 billion of revenues in fiscal 2024 and had nearly 21,000 admissions.
  • The system has the largest number of employed physicians in central Oregon, with over 400 in 2025.

Statistics:

  • SCHS has $384 million of debt outstanding.
  • The system plans to increase capital spending to over two times depreciation over the next five years.
  • Liquidity is expected to remain robust at over 200 days.
  • SCHS has generated $1.2 billion of revenues in fiscal 2024.
  • The system had nearly 21,000 admissions in fiscal 2024.
  • SCHS has over 400 employed physicians in central Oregon.

Sources:

  • Moody's Investors Service
  • Moody's Ratings: "Moody's Affirms St. Charles Health System, OR's A2 Revenue Bond Rating" (No date provided)
  • Moody's principal methodology: "Not-for-profit Healthcare" (October 2024) available at https://ratings.moodys.com/rmc-documents/430698
  • Moody's Rating Methodologies available at https://ratings.moodys.com