The Massachusetts Development Finance Agency issued $400 million in bonds to finance software upgrades for one of the state’s largest hospital systems.
Half of the bonds mature in 2032 and yield 3.59%. The other half mature in 2034, yielding 3.66%. The securities received a rating of A3 from Moody’s Investors Service and A from S&P Global Ratings.
The agency will loan the bond proceeds to Beth Israel Lahey Health (BILH), a healthcare system operating in Massachusetts and New Hampshire.
“Assignment of the A3 reflects several fundamental credit strengths including BILH’s large absolute size and leading inpatient market share, its strong reputation for clinical and research operations, and track record of successful integration of community hospitals and operational cohesion as a system over multiple years,” Moody’s analysts wrote.
BILH will use the proceeds to fund the acquisition and implementation of Epic, a medical records software, and Workday, a software primarily used for human resources management.
BILH operates 13 hospitals, almost all of which are in the Boston metropolitan area. Its flagship, Beth Israel Deaconess Medical Center, is affiliated with Harvard University. Together, the hospitals house more than 2,500 patient beds.
The onboarding of BILH marks a win for Epic, the largest electronic health record company in the United States, as it competes with rivals including Oracle Cerner. As of May, more than one-third of acute-care hospitals used Epic records, compared to a quarter using Oracle Cerner, according to KLAS Research.
The bonds are special obligations of the agency, payable by some BILH revenue.
Goldman Sachs & Co LLC served as lead underwriter on the issuance, purchasing the bonds for $441.3 million. The price reflected a premium of $43 million and a discount of $1.7 million. PFM Financial Advisors LLC served as financial advisor.