Correction: Fitch Rates Greenville Hospital System $129MM Series 2006 Bonds 'AA'; Outlook Stable.

NEW YORK -- (This is an amended version of a release issued yesterday. It contains a corrected series name in the headline.)

Fitch has assigned an 'AA' underlying rating to the $46.6 million Greenville Hospital System Board of Trustees' Hospital Refunding Revenue Bonds, Series 2006A, and $82.3 million Greenville Hospital System Board of Trustees' Hospital Refunding Revenue Bonds, Series 2006B, both of which are issued on behalf of Greenville Hospital System (GHS). The bonds will be issued as seven-day auction rate securities and are expected to be insured by Ambac Assurance Corp., whose insurer financial strength is rated 'AAA' by Fitch. In addition, GHS' approximately $456 million outstanding bonds listed below are affirmed at 'AA'. The Rating Outlook is Stable.

Bond proceeds will be used to current refund $124.3 million of GHS' outstanding Series 1996A and 1996B bonds and pay costs of issuance. The bonds are expected to sell on April 27th through negotiation by Citigroup Global Markets, Inc. GHS has also entered into two forward synthetic fixed rate swap related to the series 2006 bonds, which Fitch believes will lead to minimal risk for GHS.

The 'AA' rating is supported by GHS' dominant market position, debt service guarantee by an endowment fund and excellent liquidity relative to expenses. In its primary service area of Greenville County, GHS has a dominant market share of 70.8%, with the majority of the remaining market share captured by 287-bed St. Francis Health System (part of Bon Secours Health System, revenue bonds rated 'A-' by Fitch). GHS' designation as a University Medical Center in 2004 has begun to support physician recruitment and research funding, which should bolster its market position. GHS benefits from the guarantee of an endowment fund that represents nearly half of GHS' total cash and investments. At fiscal year-end 2005, GHS had 251.1 days cash on hand ($541.2 million) including the endowment fund, exceeding Fitch's 'AA' median of 232.3 days.

Primary credit concerns are GHS' moderately high debt burden, increasing bad debt expense, level of exposure to Medicaid reimbursement, flat utilization trends and depressed operating profitability since fiscal 2004. In fiscal 2005, pro forma maximum annual debt service coverage from EBITDA was 3.1 times (x), well below Fitch's 'AA' median of 4.8x. Moreover, debt to EBITDA was high at 5.4x. In fiscal 2005, bad debt as a percent of revenue was high at 11.0%, increasing steadily from 5.8% in fiscal 2002, which reflects a decline in Greenville County's economic profile. In fiscal 2005, 16.9% of GHS' gross revenues were derived from Medicaid, increasing from 14.8% in 2002. GHS anticipates a reduction in Medicaid disproportionate share payments in fiscal 2006, which totaled $38.6 million in fiscal 2005, demonstrating its significant exposure to changes in government reimbursement. From fiscal 2004-2005, acute discharges were relatively flat and declined 4.7% through five months ended Feb. 2006 to 16,132 from 16,926 in the prior year period. Management attributes the decline to a reduction in cardiac volume as well as a mild winter.

In fiscal 2005, GHS generated a 2.6% operating margin ($25.2 million gain), an improvement from 2004's 1.6% margin but remaining below the level of operating profitability from fiscal 2001-2003 (operating margins from 5.3%-5.9%). GHS' depressed operating profitability reflects flat utilization trends and increased growth of expenses, particularly labor and provision for bad debts. Fitch expects the opening of the 96-bed Patewood campus, expected in early 2007, will relieve capacity constraints at GHS and improve profitability.

The Rating Outlook is Stable, which reflects Fitch's expectation that GHS will return to its historically strong operating profitability over the near term. Fitch expects GHS' current projects at its Patewood and Greer campuses will enhance profitability. Nevertheless, liquidity is expected to remain flat due to significant capital spending out of cash flow over the medium term. Failure to maintain current levels of operating profitability may lead to downward pressure on the rating.

Located in Greenville, SC, Greenville Hospital System is a health system with three hospitals including a 710-bed tertiary medical center flagship and other related entities. GHS had $967 million in total revenue in fiscal 2005. GHS covenants to provide disclosure of annual audited financial statements and quarterly statements to bondholders. Quarterly disclosure is available at 'www.dac-ey.com' and includes a balance sheet, income statement, statement of cash flows, management discussion and analysis, and utilization statistics.

Greenville Hospital System Board of Trustees outstanding debt affirmed at 'AA':

-- $60,000,000 hospital revenue bonds, series 2005A(1);

-- $60,000,000 hospital revenue bonds, series 2005B(1);

-- $30,000,000 hospital revenue bonds, series 2005C(1).

-- $69,290,000 hospital revenue refunding bonds, series 2003A(1);

-- $60,000,000 hospital revenue auction rate securities, Series 2003B(1);

-- $60,000,000 hospital revenue auction rate securities, series 2003C(1);

-- $101,075,000 hospital revenue bonds, series 2001(1);

-- $48,130,000 hospital revenue bonds, series 1996A(2);

-- $82,290,000 hospital revenue bonds, series 1996B(2);

-- $15,675,000 hospital facilities revenue bonds, series 1990.

The Rating Outlook is Stable.

(1) Underlying Rating. The bonds are expected to be insured by Ambac Assurance Corp., whose insurer financial strength is rated 'AAA' by Fitch.

(2) To be refunded.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.