Yale University’s Hospital System to Sell $670 Million of Debt

Yale New Haven Health System is slated to join a flurry of hospitals issuing municipal bonds this year.

Bloomberg
First Published30 May 2024
Yale University’s Hospital System to Sell $670 Million of Debt
Yale University’s Hospital System to Sell $670 Million of Debt

(Bloomberg) -- Yale New Haven Health System is slated to join a flurry of hospitals issuing municipal bonds this year. 

The Connecticut-based chain affiliated with the Ivy League university plans to borrow about $670 million next month. Half of the proceeds from the debt sale will be used for its capital-spending program, which includes a neurosciences center, said Dana Marnane, a spokesperson for the system, in an email.

Hospital borrowing in the state and local government debt market has boomed this year, with deals already running at more than triple the rate of 2023, and more bond issuances are expected. Many of the larger systems are seeing their finances stabilize after the upheaval of the pandemic, though they’ve had to adjust to much higher costs for labor and supplies. 

Read More: JPMorgan Rises to Top of Hospital Muni-Bond Underwriter Rankings

Fitch Ratings assigned Yale New Haven Health’s debt an A rating with a stable outlook, according to a note this week. “The system has sufficient available liquidity, which should support YNHHS’s completion of its large tower expansion project inclusive of a neurosciences center,” analysts said in the note. The $840 million neurosciences center on the St. Raphael campus in New Haven is under construction, according to Marnane. 

The hospital system has a leading market share in its region and a “strong brand reputation for high-end services” that draws patients from beyond Connecticut, Fitch added. But it has also struggled. It had an operating loss of more than $160 million last year and saw a “slower than anticipated recovery of volumes.”

Yale New Haven Health filed a lawsuit this month against Prospect Medical Holdings Inc. seeking to end its planned $435 million acquisition of Prospect’s three Connecticut hospitals. Fitch said its rating doesn’t factor in the potential acquisition.

The complaint alleges that Prospect violated the terms of the purchase agreement by engaging in “a pattern of irresponsible financial practices, severe neglect and general mismanagement” that have “run the Prospect Hospitals into the ground” and left them vulnerable to a cyberattack in August 2023 that exposed data from 110,000 patients and staff. 

Prospect Medical didn’t respond to a request for comment. 

Yale New Haven Health includes five acute-care hospitals and specialty-care and outpatient facilities in New England and New York’s Westchester County. The system has $552 million in outstanding municipal debt, according to data compiled by Bloomberg. The new bonds are expected to price the week of June 10, according to Fitch. 

--With assistance from Andrew Harrer.

More stories like this are available on bloomberg.com

©2024 Bloomberg L.P.

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