Moody’s upgrades NYU Langone Hospitals $3.2B revenue bonds to A1

Moody’s Investors Service upgraded New York University Langone Hospitals’ $3.2 billion of outstanding revenue bonds to A1 from A2 and revised the outlook to stable from positive.

“The upgrade reflects an expected continuation of very strong and consistent operating performance and revenue growth relative to peers, driven by NYULH’s very strong market position and highly effective and disciplined leadership,” Moody’s said.

Moody’s said the upgrade also reflected growth initiatives combined with expense controls. Its significant cash flow will provide a cushion for large capital spending over the next several years, Moody’s said, adding that it will allow for adequate maintenance of liquidity with an estimated 150 to 160 days of cash on hand.

“Favorably, capital spending will be funded by operations and strong philanthropic support; with no incremental debt plans anticipated over the next several years,” Moody’s said. “NYULH will continue to benefit from its proven ability to execute multiple strategies despite ongoing labor and supply inflation headwinds, a governance consideration.”

“The stable outlook includes expectations that NYULH will continue to generate robust margins needed to support high capital spending and allow for maintenance of days cash on hand in the 150-160 day range,” Moody’s said.

In February 2022, S&P Global Ratings raised its long-term and underlying rating on New York State Dormitory Authority’s debt issued for NYU Langone Hospitals to A-plus from A. S&P also raised the rating on NYULH’s taxable debt to A-plus from A.

S&P has a stable outlook on all NYULH ratings.

“The upgrade reflects meaningful multi-year improvement in balance sheet metrics supported by continued healthy cash flow,” S&P credit analyst Cynthia Keller said at the time.

“While NYULH’s balance sheet metrics are generally below median levels for the higher rating level we believe the organization has certain characteristics that can compensate for this weakness,” Keller said.

“These characteristics include an extremely young average age of plant that allows for moderation of capital spending if necessary, robust margins and cash flow well above expectations, even during the pandemic, that generate solid debt service coverage, and increasing geographic coverage outside Manhattan leading to continued system growth and diversity that can lower overall credit risk,” she said.

NYU Langone Health is one of the largest health systems in the Northeast — employing more than 48,000 people in six inpatient facilities in the New York City region and in Florida.

The inpatient locations include Tisch Hospital, the Kimmel Pavilion, the Hassenfeld Children’s Hospital, NYU Langone Orthopedic Hospital, NYU Langone Hospital Brooklyn and NYU Langone Hospital Long Island. It also operates many ambulatory facilities in New York City as well as on Long Island and Westchester County and New Jersey and Florida.

NYU Langone is also an academic teaching institution with its headquarters in midtown Manhattan, the location of the NYU Grossman School of Medicine.

Joseph Lhota, NYU Langone’s executive vice president, is responsible for helping improve and integrate medical care, research and education. He also serves as a representative to government and elected officials.

Lhota is the former chairman of the board and CEO of the New York Metropolitan Transportation Authority.

He worked in Mayor Rudolph Giuliani’s administration and was deputy mayor for operations. Prior to that, he served as the city’s director of the Mayor’s Office of Management and Budget and the city’s commissioner of finance.

Before he worked in the public sector, Lhota spent 15 years in investment banking, serving as director of public finance at Credit Suisse First Boston and as managing director at PaineWebber, where he specialized in public finance, serving state and local governments throughout the United States.