A Missouri state authority issued $296.4 million in bonds to finance acquisitions by Mercy Health, a nonprofit healthcare system headquartered near St. Louis. The authority will loan the bond proceeds to Mercy.
The bonds, sold by the Health and Education Facilities Authority of the State of Missouri, mature between 2040 and 2052, yielding between 4.68% and 5.15%. They received a rating of A1 from Moody’s Investors Service and A+ from S&P Global Ratings.
“The assignment of the A1 reflects Mercy’s position as a sizable, regionally diverse system with an extensive ambulatory footprint across four states,” Moody’s analysts wrote. They added that “Mercy will benefit from its keen focus on data analysis as well as lower cost, value-based care, which should help differentiate the system with commercial payers.”
The issuance comes as Mercy expands its footprint in Missouri. In August, Mercy signed an agreement to acquire SoutheastHEALTH, a hospital system based in Cape Girardeau, Missouri.
“Bringing the two health systems together will create a regional hub for offering expanded access to healthcare services in Southeast Missouri and the greater region Mercy serves,” SoutheastHEALTH CEO Ken Bateman said in a press release announcing the merger.
Mercy Health is a 42-hospital system with facilities in Missouri, Arkansas, Kansas, and Oklahoma. The bonds are special limited obligations of the authority, payable by Mercy Health revenue. Mercy generated $8 billion in operating revenue last year.
J.P. Morgan Securities LLC served as lead underwriter on the issuance, purchasing the bonds for $300 million. The price reflected a premium of $4.8 million and a discount of $1.2 million.