CHICAGO, Ill. – December 5, 2018 – Kaufman Hall today extended congratulations to its client Advocate Aurora Health (AAH) for being awarded the Healthcare Deal of the Year by The Bond Buyer. The win also qualifies AAH as a finalist for The Bond Buyer’s 17th Annual National Deal of the Year, which will be announced Thursday evening, December 6, at an event in New York City.
AAH was nominated for its 2018 financing that created a unified obligated group, enabling the health system to combine its legacy treasury operations, capture present value savings and accelerate operating as a single, integrated organization. Kaufman Hall’s Treasury and Capital Markets team advised on the transaction, which involved issuing 10 different series of bonds and accessing four different borrowing markets simultaneously, resulting in AAH borrowing a total amount of $1.2 billion.
AAH is the 10th-largest not-for-profit integrated health system in the U.S. following the merger of Advocate Health Care Network and Aurora Health Care, Inc., in April 2018. The money raised through the bond issues was used to refinance Aurora Health’s legacy debt and consolidate the two legacy organizations onto a single borrowing platform. The post-financing capital structure of AAH resulted in $250 million of cash flow relief over the first five years, and a reduction of annual debt service to $174 million from $225 million.
“We are thrilled that The Bond Buyer has recognized Advocate Aurora Health for the inaugural borrowing and market debut of a Top 10 healthcare credit,” said Jim Blake, a Kaufman Hall managing director and leader of the team that advised AAH on the transaction. “The management team spent considerable time and effort in the lead-up to the financing, including educating the credit and investor community about the new organization. The effort paid off, with AAH receiving inaugural credit ratings of Aa3/AA/AA – all with stable outlooks – and the bond pricing process resulted in the participation of over 60 different firms, including several international investors. It was a hugely successful transaction from a number of perspectives.”
As the No. 1 healthcare financial advisor for 12 of the past 13 years, Kaufman Hall brought deep transactions experience and market expertise that helped AAH achieve its goal of maintaining a well-balanced capital structure, with approximately 60 percent of its overall debt at fixed interest rates. The Kaufman Hall team also helped AAH capitalize on the opportunity to pursue Acquisition Financing treatment, the only avenue for not-for-profit borrowers to achieve tax-exempt advance refunding savings following the passage of the Tax Cuts and Jobs Act.
“Under current tax law, the only way borrowers can directly take advantage of the economic benefits of tax-exempt advance refundings is during the course of strategic transactions,” said Matt Robbins, a Kaufman Hall senior vice president who also advised AAH on the transaction. “Post tax reform, acquisition financing treatment can provide a significant economic opportunity that adds to the potential synergies of a merger.”
For more than a decade and a half, the editors of The Bond Buyer have selected outstanding municipal bond transactions for special recognition. The 2018 awards, which considered deals that closed between October 1, 2017, and September 30, 2018, drew nominations that represent the full diversity of the communities and public purposes that are served by the municipal finance market.
About Kaufman Hall
Kaufman Hall provides management consulting and software to help organizations realize sustained success amid changing market conditions. Since 1985, Kaufman Hall has been a trusted advisor to boards and executive management teams, helping them incorporate proven methods into their strategic planning and financial management processes, and quantify the financial impact of their plans and strategic decisions to consistently achieve their goals.
Kaufman Hall services use a rigorous, disciplined, and structured approach that is based on the principles of corporate finance. The breadth and integration of Kaufman Hall advisory services are unparalleled, encompassing strategy; financial and capital planning; cost transformation; treasury and capital markets management; and mergers, acquisitions, partnerships, and joint ventures.
Kaufman Hall software includes the Axiom Software Suite, providing sophisticated, flexible performance management solutions that empower finance professionals to analyze results, model the future, and optimize organizational decision making. Solutions for long-range planning, budgeting and forecasting, performance reporting, capital planning, and cost accounting deliver decision support, reporting, and analytics within an integrated software platform. Kaufman Hall’s Peak Software empowers healthcare organizations with clinical benchmarks, data, and analytics to provide a higher quality of care for optimized performance and improved patient outcomes.