Bulletin: Thomas Jefferson University, PA Ratings Not Currently Affected By Proposed Merger With Einstein Health Network

NEW YORK (S&P Global Ratings) April 2, 2018--S&P Global Ratings said today that Thomas Jefferson University, Pa.'s (TJU) letter of intent to merge with Einstein Healthcare Network (Einstein) does not immediately affect the ratings on TJU. This includes the 'A+' rating we assigned in March to the Montgomery County Higher Education&Health Authority's $565 million series 2018A revenue bonds issued for TJU. We do not rate Einstein. For more information on TJU, please see the report published March 12, 2018, on RatingsDirect. As indicated in our March report, we expected that TJU would split its proposed $565 million series 2018 bonds into three series. Management indicates that its current financing plan proposes issuance of $390 million series 2018A fixed

... and anticipated benefits from the merger. If TJU and Einstein sign a definitive agreement, management anticipates a lengthy approval process. Pending discussion with management and a better understanding of Einstein's current and future financial performance, we believe it could be possible to accommodate this merger at TJU's current rating level, as long as TJU meets our future financial expectations as outlined in our published rating report. Benefits of this potential merger include continued growth in clinical and education scale, enhanced geographic coverage, and additional opportunities for system synergies and clinical rationalization. In addition, the organizations have familiarity with each other, since both were previously part of a combined health system. However, we anticipate that Einstein will be dilutive to several financial metrics largely because of significant debt issued to construct a new hospital in Montgomery...

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