Rating Action: Moody’s assigns A1 to SSM Health, MO’s Ser. 2022A; outlook stableGlobal Credit Research – 23 Mar 2022New York, March 23, 2022 — Moody’s Investors Service has assigned an A1 to SSM Health’s proposed Health Facilities Revenue Bonds (SSM Health), Series 2022A. The par amount of bonds is expected to be about $317 million and maturity is 2052; bonds will be issued by the Missouri State Health & Educational Facilities Authority. At this time we are affirming our A1 on SSM Health’s outstanding debt and A1 on Agnesian HealthCare Inc.’s (WI) debt. The organization has approximately $2.6 billion of outstanding debt. The outlook is stable.Please click on this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBM_PBM907627943 for the List of Affected Credit Ratings. This list is an integral part of this Press Release and identifies each affected issuer.RATINGS RATIONALEThe assignment and affirmation of SSM Health’s A1 reflects its large base of operations and cash flow diversified both by market and business line. Though margins will remain modest compared to peers, we expect SSM Health will maintain good liquidity and debt service coverage metrics over the near term.Patient care will remain the largest business line though joint ventures in its health insurance and pharmacy benefit manager businesses and other investments and acquisitions will further diversify SSM’s cash flow and complement its patient care delivery network, particularly as health insurance and value based care arrangements grow. With major strategic capital spending complete and a relatively low average age of plant, we expect SSM will have greater capital spending flexibility and will maintain its current liquidity profile.Affirmation of Agnesian HealthCare, Inc.’s (WI) A1 reflects affirmation of SSM Health’s A1; Agnesian is a designated affiliate under the master trust indenture of SSM Health’s parent corporation, SSM Health Care Corporation.RATING OUTLOOKThe stable outlook reflects our expectation that SSM Health will maintain balance sheet metrics, excluding Medicare advances, at approximately current levels, while improving the operating cash flow margin.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS- Sustained, improved operating measures- Significantly improved debt and balance sheet measures- For Agnesian’s bonds: an upgrade of SSM Health’s long term ratingFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS- Inability to achieve performance and value based care targets or demonstrate incremental margin improvement over current performance- Material additional debt absent commensurate cash flow growth or degradation of liquidity metrics- Material negative change in regulations impacting a major business line- Material loss of market share in a key market- For Agnesian’s bonds: a downgrade of SSM Health’s long term ratingLEGAL SECURITYEffective with the Series 2022A bonds, SSM is changing several provisions in the MTI that will take effect once a majority of bondholders consent; it is expected that SSM will achieve consent over the next 1 – 2 years.Changes include a change in the debt service coverage test such that there would be an event of default only if coverage was below 1.0x for two consecutive years and days cash on hand fell below 150 days and debt to capitalization exceeded 67%. Additionally, the definition of investment returns included in the debt service coverage test would be changed to take an average of the prior three year’s returns, rather than only the most recent year’s return.All parity bonds are issued under SSM’s designated affiliate model – with SSM Health Care Corporation (SSMHCC) as the only legal obligor. The bonds are secured by a general unsecured obligation of SSMHCC, which has limited assets and cash flow. The inpatient operating divisions are not members of the obligated group, but designated affiliates. The designated affiliates, which are required to upstream funds to SSMHCC for debt service obligations, can be de-designated at any time. Under the designated affiliate structure, the potential for future subordination of the bonds is possible. The credit group is primarily comprised of the system’s hospitals. Dean Health Plan and Dean Health Insurance, Inc. and a variety of other entities including physician practices are not members of the credit group.The Master Trust Indenture provides for an annual debt service coverage test of 1.1x.USE OF PROCEEDSBond proceeds will be used to refinance debt including a balance on SSM Health’s revolver.PROFILESSM Health’s integrated system of care includes more than 290 physician offices and other outpatient sites, 23 hospitals, 10 post-acute facilities, comprehensive virtual care, home care and hospice services and a health insurance company. Its pharmacy benefit company, Navitus Health Solutions, serves as a full pass-through pharmacy benefit manager (PBM).METHODOLOGYThe principal methodology used in these ratings was Not-For-Profit Healthcare published in December 2018 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1154632. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESThe List of Affected Credit Ratings announced here are all solicited credit ratings. For additional information, please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com. Additionally, the List of Affected Credit Ratings includes additional disclosures that vary with regard to some of the ratings. Please click on this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBM_PBM907627943 for the List of Affected Credit Ratings. This list is an integral part of this Press Release and provides, for each of the credit ratings covered, Moody’s disclosures on the following items:- Rating Solicitation- Issuer Participation- Participation: Access to Management- Participation: Access to Internal Documents- EndorsementFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Daniel Steingart Lead Analyst PF Healthcare Moody’s Investors Service, Inc. 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