December 11, 2017

Overlake’s financial strength yields “A” bond ratings from Moody’s and S&P

Bellevue, Wash. – (December 11, 2017) – Overlake Medical Center announced today an investment-grade, “A2” rating from Moody’s Investor Services and an A “stable” rating from S&P Global Ratings. The ratings reflect Overlake’s strong market position and operating performance just as Moody’s and Fitch recently issued negative outlooks on the nonprofit healthcare sector. 

“These positive credit ratings reflect Overlake’s sound business position as one of Washington state’s leading health systems,” said Overlake President and CEO J. Michael Marsh. “The healthcare industry will continue to face ongoing challenges but we are confident we can continue to deliver exceptional patient care while maintaining long-term financial strength."

Moody’s assigned an A2 rating to Overlake’s Revenue Bonds, Series 2017A (Overlake Hospital Medical Center) and Refunding Revenue Bonds, Series 2017B (Overlake Hospital Medical Center) to be released by the Washington Health Care Facilities Authority, and affirmed the A2 rating on $140 million of outstanding debt.  Moody’s recognized Overlake’s recent investments in clinics, outpatient services and collaborations with other regional providers; “We expect Overlake will continue to grow volume and maintain favorable financial performance,” according to the Moody’s report.

S&P Global assigned its ‘A’ long-term rating, recognizing Overlake’s leading inpatient market share as well as strong ties and contract with Kaiser Permanente (Kaiser), formerly the Group Health Cooperative (GHC).  Kaiser has a major presence on the Overlake campus. “Overlake has a history of delivering on results… and responding quickly to challenges which has allowed it to grow and swiftly strengthen its financial profile over the last several years,” according to the S&P report.

These positive ratings for Overlake come at a challenging time for non-profit health care systems. Fitch recently reported a negative sector outlook for 2018, "Reflecting long term challenges caused by regulatory, political and competitive uncertainty…” In its report on the overall nonprofit healthcare and hospital sector, Moody’s recently revised downward its outlook for the industry from stable to negative. Moody’s cited uncertainty regarding federal healthcare policy for nonprofit hospitals after the sector experienced a larger-than-expected drop in cash flow this year. “Overlake is pleased with the affirmation of our strong ratings given the recent outlook downgrade of the hospital industry as a whole from stable to negative,” said Overlake interim Chief Financial Officer Andrew Tokar.

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