Fitch Downgrades UF Health-Jacksonville, citing liquidity concern

UF Health-Jacksonville had $120 million fiscal year-end 2018, which equates to cash on hand of roughly 65 days. (UF Health-Jacksonville)

University of Florida Health-Jacksonville (UFH-J) saw its bond rating downgraded last week by one of the leading credit rating agencies.

Fitch said it was issuing a revenue bond rating of BBB- to the 606-bed UFH-J, in part due to expected liquidity in the health system's balance sheet that failed to materialize. But it maintained a stable outlook for the health system. 

The health system, formerly known as Shands Jacksonville Healthcare, has more than $190 million in revenue bonds. 

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However, the health system does face competition in its market and, as an academic safety net hospital, has a payer mix that includes a significant portion of patients who self-pay or are on Medicaid. And while operating results in fiscal 2018 were in line with recent trends, management estimated the September 2017 storm Hurricane Irma hit the bottom line by more than $4 million.

UFH-J had approximately $250 million in debt at audited fiscal year-end 2018 (June 30 year-end). Unrestricted cash and investments measured over $120 million fiscal year-end 2018, which equated to cash on hand of roughly 65 days. Fitch generally considers cash on hand of under 75 days to be an asymmetric risk.