Fitch Upgrades CHI’s Overall Credit Outlook


KentuckyOne Health

CHI’s overall credit outlook was upgraded to "stable" from negative by Fitch Ratings, which cited a strong start to the 2018 fiscal year led by continuing financial improvements in several key markets, including Kentucky, Colorado and the Pacific Northwest.

"The current fiscal year has clearly begun in a promising and positive way," said Dean Swindle, CHI’s president of enterprise business lines and chief financial officer. "We’re building on the progress from the previous fiscal year, and this improvement in our ratings outlook by Fitch is a clear recognition of our financial improvement."

Kevin Lofton, CHI’s CEO, said, "I’m confident we will continue to see our credit ratings become even stronger as we now have heightened focus on expanding market share across CHI, and improving operations in Texas. We are on the right path toward a successful future and I want to express my sincere appreciation to all of you for helping us become a higher performing organization."

In its report, Fitch Ratings affirmed CHI’s BBB+ rating and said it anticipates improved financial performance for the entire 2018 fiscal year, reinforcing the impact of CHI’s turnaround efforts in recent years. It also removed CHI from a ratings designation known as "credit watch evolving," which reflected uncertainly about the organization’s discussions of a potential alignment with Dignity Health when it was issued by Fitch in July 2016.

CHI’s unaudited results for the first five months of the current fiscal year highlight the continuing improvement, Fitch said, noting that operating EBIDA (earnings before interest, depreciation and amortization) jumped to 5.7 percent in the first quarter of FY2018 compared to just 1.9 percent in the same period of the previous fiscal year.

Fitch emphasized the need for CHI to focus on expanding market share and enhancing volumes to improve operating cash flow in key markets, including Texas, where the organization is investing considerable resources to stabilize operations. The third-largest market for CHI, Texas accounts for about 14 percent of the system’s revenues and experienced a $26 million loss from business operations in the first quarter of FY2018 as a result of Hurricane Harvey.