Intermountain Healthcare and SCL Health announced the completion of their merger this week; however the systems’ debt remains separate for now.
The combined Utah-based Intermountain and Colorado-based SCL will operate 33 hospitals and run 385 clinics in Utah, Idaho, Nevada, Colorado, Montana, Wyoming, and Kansas, according to the announcement.
The merger makes Intermountain Healthcare, the brand the merged operation will use, the eleventh-largest nonprofit health system in the United States, it added.
What will happen to each systems’ outstanding debt is being evaluated as the merger did not include an agreement regarding the liability for or guarantee of debt, according to
Intermountain said it plans to evaluate a future combination of its debt structure with that of SCL and whether the refinancing of any existing debt “could be beneficial to the unified health system.”
“Any such combination of the existing debt structures or refinancing of any existing debt would be dependent on market conditions, management considerations and other factors, and there can be no assurance as to when any such combination of the existing debt structures would occur or whether any debt of (Intermountain) Health Services or SCL Health would be refinanced in connection with any transaction combining the existing debt structures of Health Services and SCL Health,” the notice said.
Intermountain’s long-term debt totaled $2.662 billion at the end of 2021 and SCL had $1.23 billion of long-term debt as of Sept. 30, 2021.
Both systems have swap agreements related to some of their debt, according to financial reports.
Intermountain has agreements with six counterparties, while SCL has swap agreements with Merrill Lynch Capital Services and Wells Fargo Bank for a portion of its variable-rate bonds.
SCL is rated AA-minus by S&P Global Ratings, Aa3 by Moody’s Investors Service, and AA-minus by Fitch Ratings, all with stable outlooks. Intermountain has ratings of Aa1 from Moody’s and AA-plus from S&P, also with stable outlooks.
Last week, the Colorado Department of Law allowed the merger to proceed after finding the SCL’s charitable purpose will not materially change and that Colorado assets will not be transferred out of the state as part of the transaction.
