KBRA assigns A- long-term rating with a Stable Outlook for the El Paso County Hospital District (the "District") Revenue Refunding Bonds, Series 2024 (the "Bonds"). The long-term rating reflects the District’s role as a safety net provider and Level I trauma center for El Paso County, TX (the “County”); rebounding patient volumes following the COVID-19 pandemic and the addition of the new surgical hospital; adequate, stable operating cash flows supporting repayment of debt; and manageable future capital needs.

The Stable Outlook is predicated upon the District’s on-going ability to generate stable operating cash flows sufficient to service debt obligations. The Stable Outlook further assumes gradual moderation in leverage ratios, and the maintenance of stable levels of liquidity.

Key Credit Considerations

The rating was assigned because of the following key credit considerations:

Credit Positives

• The District’s role as the only safety net healthcare provider in the County plays a critical role within the County’s public health mission.
• Adequate, stable operating cash flows supporting repayment of debt.
• Manageable future capital needs.

Credit Challenges

• Macroeconomic environment has placed upward pressure on wages.
• Considerable reliance on governmental payors and charity care, which somewhat constrains the District’s ability to improve margins.
• Weak, though stable, unencumbered liquidity.

Rating Sensitivities

For Upgrade

• Significantly strengthened, sustained improvement in operating performance leading to increased liquidity and moderating leverage.
• While not expected, fundamental changes in how governmental payors reimburse providers for care.

For Downgrade

• Declining patient volumes which reduce the District’s ability to maximize net patient revenues.
• Additional debt issuance without a commensurate increase in resources available for repayment.

To access rating and relevant documents, click here.

Methodologies

• Public Finance: U.S. Not-For-Profit Healthcare Rating Methodology
• ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1006251

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