Cooper Health gets an ‘A’ credit rating from S&P

Standard & Poor’s gave Cooper Health an ‘A’ credit rating this week, citing the sustained strength of the South Jersey nonprofit’s financial results while it expands market share in the region, in part by hiring more doctors and other clinical staff.

The new rating assess the Cooper’s overall creditworthiness. S&P’s previous ‘A-’ rating for Cooper, from 2022, applied only to a specific issue of municipal bonds.

The ratings agency praised Cooper management for developing partnerships with community health systems, recruiting physicians, and expanding the health system’s outpatient network, including the opening of a large multispecialty clinic in Moorestown last fall.

As challenges for Cooper, S&P pointed to tough competition from Virtua (which has strong ties to Penn Medicine) and Jefferson Health. It also noted that South Jersey health systems lose patients in an ongoing trend of “persistent outmigration” to Philadelphia’s academic medical centers for advanced, high-cost care.

Cooper’s MD Anderson partnership since 2013 has had some success at slowing that flow of patients to Philadelphia. Cooper’s share of the market for oncology services is 22.5%, according to S&P’s Feb. 28 report. It did not define the geographic area for that calculation.

In the last year or so, Cooper says it has hired about 100 physicians and 100 nurse practitioners and physician assistants in a wide range of specialties, helping to build patient volumes. Some of those physicians have been recruited from Philadelphia competitors.

Another ratings agency, Fitch, gave Cooper an ‘A+’ rating on Feb. 14. That was Fitch’s first Cooper rating.

In 2022, Cooper announced a long-term expansion plan for its Camden campus that could cost as much as $2 billion. The first phase, a $450 million project including a new patient pavilion, is expected to start late this year, Cooper said.

“As the project is still in the design phase, we do not have specifics on what services will be in the tower, but it will include a number of new, state-of-the-art private patient rooms,” Cooper’s chief financial officer Brian Reilly said in an email.

S&P noted that Cooper has received $200 million in state and county grants to help pay for the initial phase of the three-part expansion plan. The remainder is expected to come from operating profits.

The ratings agency said that Cooper’s pending acquisition of Cape Regional Health System in Cape May County is not expected to weaken Cooper financially because it would constitute only 7% of Cooper’s operating revenue.

Cooper had $2.2 billion in operating revenue last year, up 12.5% from 2022, S&P said. Its operating income rose to $162 million from $130 million, but the 2023 results included $28.2 million from a federal drug discount program settlement.