Texas disease research institute gets negative outlook from Moody's

Moody's Ratings revised the outlook on Texas Biomedical Research Institute's Baa2 rating to negative from stable on Monday, citing its reduced liquidity and dependence on federal grants.

The working cash position of the non-profit institute, which specializes in infectious diseases, weakened through fiscal 2025 as it recovers from federal grant funding delays and unexpected reduction in fiscal 2024 contract revenue in the wake of a study cancellation, the rating agency said.

"The outlook also considers a continued uncertain operating environment for the institute, which derives roughly 84% of its grant and contract revenue from federal government agencies," Moody's added.

Shortly after President Donald Trump began his second term in office in January he ordered a freeze on all federal grants and loans. Some funding was subsequently thawed.

The San Antonio-based institute's operating performance will continue to be "quite narrow" as it constructs a high containment research facility expected to be in operation in 2029, according to Moody's, which said the Baa2 revenue bond rating reflects the institute's "very good brand and unique strategic position as one of only seven National Primate Research Centers, and the only one in the US with a biosafety level four laboratory."

The Moody's report "highlights our unique role in responding to the increasing demand for innovative ways to treat infection and develop medical countermeasures that are critical to national security," institute President and CEO Larry Schlesinger, MD, said in a statement.

"Our investments in new research facilities are deliberate and forward-looking and we remain confident in our long-term stability," he said. "These projects are designed to expand important research partnerships and diversify revenues."

The institute, which had about $182 million of debt outstanding at the end of fiscal 2024, last issued bonds in 2024 with a nearly $120.7 million deal sold through the Greater Texas Cultural Education Facilities Finance Corp. It has also issued bonds using the Public Finance Authority as conduit.