Morningstar DBRS Assigns Issuer Rating of AA to The Ottawa Hospital, Confirms Senior Unsecured Debentures Credit Rating at AA

DBRS Limited (Morningstar DBRS) assigned an Issuer Rating of AA with a Stable trend to The Ottawa Hospital (TOH or the Hospital) and confirmed the credit rating on the Hospital's Senior Unsecured Debentures at AA with a Stable trend.

KEY CREDIT RATING CONSIDERATIONS
The credit ratings are supported by the assessment that government support is very strong for TOH. The Hospital is significantly important to the healthcare system of the Province of Ontario (Ontario or the Province) as evidenced by its position as one of the largest acute-care, teaching, and research hospitals in Canada, and by the breadth of population it serves. This strong government support would mitigate any potential weakness arising from TOH's own intrinsic assessment, such as any material weaknesses in the TOH's debt and liquidity profile, and its financial metrics.

CREDIT RATING DRIVERS
A change in Ontario's credit ratings would lead to a commensurate change in the Hospital's credit ratings. The credit rating would be downgraded if Morningstar DBRS' assessment of government support were to weaken or if TOH experiences a material deficiency or weakness in its intrinsic assessment, such as a sustained deterioration in its financial performance, without management response.

CREDIT RATING RATIONALE
The Hospital benefits from very strong government support. TOH is one of the largest acute-care, teaching, and research hospitals in Canada serving a population of approximately 1.3 million people across eastern Ontario, western Québec, and Nunavut. With operations spread across three campuses in the Ottawa region, TOH is the only tertiary care hospital in Eastern Ontario and is affiliated with the world-renowned University of Ottawa Heart Institute and also ranks among the top five hospitals in Canada for overall research funding. Ontario provides significant funding and strong oversight for the Hospital's operations. The healthcare sector remains a critical priority for Ontario, and the provincial government has a track record of providing additional funding to hospitals when necessary.

TOH conservatively budgeted for a deficit of $66.9 million in 2024-25; however, increased provincial funding has reduced the deficit to $28.1 million based on preliminary results. For 2025-26, TOH's proposed budget shows a deficit of approximately $87.0 million; although, this does not yet reflect any potential new funding announcements from the Province. The Province released its 2025-26 budget on May 15, 2025, which included a 4.0% increase in healthcare spending. While additional provincial funding is likely, it may be insufficient to return TOH to a balanced position.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (May 16, 2025), https://dbrs.morningstar.com/research/454196.

Notes:
All figures are in Canadian dollars unless otherwise noted.

Morningstar DBRS applied the following principal methodology:
-- Global Methodology for Rating Public and Not-For-Profit Hospitals and Health Systems (December 16, 2024), https://dbrs.morningstar.com/research/444619

Morningstar DBRS credit ratings may use one or more sections of the Morningstar DBRS Global Corporate Criteria (February 3, 2025; https://dbrs.morningstar.com/research/447186) which covers, for example, topics such as holding companies and parent/subsidiary relationships, guarantees, recovery, and common adjustments to financial ratios.

The following methodology has also been applied:
-- Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (May 16, 2025),
https://dbrs.morningstar.com/research/454196

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

A description of how Morningstar DBRS analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/431153.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info-DBRS@morningstar.com.

The credit ratings were initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for these credit rating actions.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with these credit rating actions.

These are solicited credit ratings.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS trends and credit ratings are under regular surveillance.

Information regarding Morningstar DBRS credit ratings, including definitions, policies, and methodologies, is available on https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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