...The assignment of the 'AA-' IDR and long-term bond ratings reflect Avera Health's (Avera) strong operating risk and financial profile assessments, and significant size and scale in the Sioux Falls, South Dakota market and in the four other states in which it has facilities. The system has leading market positions in service areas with stable to favorable demographics. Avera's operating performance has softened over the past two fiscal years due to operational headwinds faced by the majority of the sector. However, Avera has implemented a strategic plan to return the system to margins more in line with historical levels, or better; operating EBITDA margins have averaged 7.6% for the past five years. While labor expense was elevated due to the use of contract labor, Avera has been able to lower these costs on a monthly basis since mid-2022. With the decline in labor cost and other measures, Avera posted an operating EBITDA margin of 10.5% for the first half of fiscal 2024 (unaudited six months...
