Kentucky’s UofL Well being downgraded to BBB by S&P

Bloomberg Information

UofL Well being, primarily based in Kentucky, was downgraded to BBB from BBB-plus, by S&P International Scores, which cited sizable working losses, low days money available, and a diminished ratio of unrestricted reserves to long-term debt. 

S&P’s ranking motion was on debt issued by the Louisville/Jefferson County Metropolitan Authorities in Sequence 2022A and 2022B bonds. The brand new ranking outlook is secure.

UofL Well being has had skinny days money available since inception however this slid to 30 days as of June 30, S&P mentioned. This was beneath UofL Well being’s budgeted expectations. Nevertheless, UofL Well being has a $50 million undrawn line of credit score. 

The downgrade additionally stemmed from continued working losses in 2025 stemming from labor and wage stress. The system continues to make use of short-term company nurses and has staffing and start-up prices related to the current opening of two services. 

The system is closely reliant on Medicaid funding for revenues. S&P expects it should see a significant discount on this income in 2028 due to impending cuts to this system. 

For credit score positives, UofL Well being lately engaged a advisor to establish and implement structural modifications to enhance its working margins on a sustainable foundation, S&P mentioned. The rankings company expects “these efforts will yield optimistic working margins in 2026, which we view as each achievable and essential to keep away from extra ranking stress.”

The system’ UofL Hospital is without doubt one of the main educational medical facilities in Kentucky, S&P mentioned. It has the Louisville space’s solely degree 1 trauma middle and state’s solely complete stroke middle. 

For credit score positives, S&P famous the system would not take part in an outlined profit pension plan, doesn’t have contingent-liability publicity and has no swap preparations. Nevertheless, it does have substantial long-term working lease liabilities. 

The UofL Well being system had $435 million in debt excellent as of June 30.

UofL Well being did not reply to a request for a remark. 

Fitch Scores downgraded UofL Well being to BBB from BBB-plus in February.