...The 'AA-' IDR and revenue bond rating reflect Memorial Health Services' (MemorialCare) extremely strong balance sheet and financial profile with leverage metrics that align with the high 'AA' rating category, despite the system's weaker revenue defensibility and mid-range operating risk assessments. MemorialCare's weaker revenue defensibility is a result of the system's higher Medicaid as percentage of gross revenues and operations in a fragmented market, but the system's true market strategy continues to be focused on steady revenue diversification, with emphasis on value-based care and financial metrics to continue to attract patients and employers. Fitch Ratings anticipates that this strategy, which is heavily based on maintaining a low-cost structure and partnering with physicians and other providers, will allow the system to generate moderately improving cash flows in future years. MemorialCare has sufficient liquidity in the form of highly liquid unrestricted cash and investments...
