Fitch Affirms HealthEast, Minnesota at 'BB+'; Outlook to Positive.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed approximately $189 million revenue bonds issued on behalf of HealthEast and Controlled Affiliates (HealthEast) at 'BB+' (issues listed below). Fitch has also revised the Rating Outlook to Positive from Stable. The Rating Outlook revision to Positive reflects HealthEast's sustained improved financial performance exhibited over the last three years and most recent interim period with a return to operating profitability. Improved financial performance has been driven by increased managed care rates, rising volume, and improved performance at its new hospital, Woodwinds. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: improved to 2.2% in fiscal 2004 from negative 1.9% in fiscal 2001, and was 2.3% through the three months ended Nov. 30, 2004. HealthEast is performing ahead of budget through the interim period and should meet its fiscal 2005 net income budget of $15 million. Other credit strengths include a leading market position in St. Paul St. Paul as a missionary he fearlessly confronts the “perils of waters, of robbers, in the city, in the wilderness.” [N.T.: II Cor. 11:26] See : Bravery with 38% market share in fiscal 2004 compared to the next closest competitor United Hospital (part of Allina Health System; rated 'A-' by Fitch) with 30.4% market share. Market share has remained relatively stable over the last four years for the three dominant players in the market. Credit concerns include weak liquidity, future capital needs, and high managed care penetration. HealthEast's liquidity is light with 44 days cash on hand and 39.6% cash to debt at Nov. 30, 2004, but has grown from 28.9 days cash on hand and 15.7% cash to debt at Aug. 31, 2001. Liquidity growth has been hampered by capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. and bottom line losses in its recent history. Fitch believes balance sheet growth will be management's biggest challenge especially with major capital needs in the near future. HealthEast's five year capital plan totals approximately $160 million and includes strategic and routine capital expenditures. HealthEast's payor mix comprises 53% of revenue from managed care payors, which is split between four major companies. Recent rate negotiations have been favorable; however, the sustained improvement of the system will depend on management's ability to continue securing favorable increases going forward. An upgrade to an investment grade rating will be dependent on HealthEast's ability to sustain the current operating performance and improve its liquidity position while undertaking its five year capital plan. Headquartered in St. Paul, Minnesota, HealthEast is a large health care system providing inpatient and outpatient care, rehabilitation rehabilitation: see physical therapy. services, and senior care, as well as a variety of other ancillary services primarily through three acute care hospitals, one long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. hospital, two nursing homes, two ambulatory surgery centers ambulatory surgery center A free-standing center that performs various types of surgery , and 15 primary care clinics. The three acute care hospitals operate 511 of 654 licensed beds. HealthEast only covenants to provide annual disclosure to bondholders, which Fitch views negatively. However, management has been submitting quarterly financial data to the nationally recognized municipal securities information repositories. Disclosure to Fitch has been good with the receipt of timely quarterly interim statements and annual updates after the completion of the audit. However, the quarterly statements do not include a cash flow statement. Outstanding debt: -- $48,215,000 Washington County Washington County is the name of 30 counties and one parish in the United States of America, all named for George Washington. It is the most common county name in the United States. Housing and Redevelopment Authority Noun 1. redevelopment authority - a public administrative unit given responsibility for the renovation of blighted urban areas administrative body, administrative unit - a unit with administrative responsibilities , hospital facility revenue bonds (HealthEast Project), series 1998; -- $27,875,000 City of St. Paul, MN Housing and Redevelopment Authority, hospital facility revenue bonds (HealthEast Project), series 1997; -- $12,305,000 City of Maplewood, MN, health care facility revenue bonds (HealthEast Project), series 1996; -- $16,378,000 City of South St. Paul, MN Housing and Redevelopment Authority, hospital facility revenue refunding bonds (HealthEast Project), series 1994; -- $95,384,000 City of St. Paul, MN Housing and Redevelopment Authority, hospital facility revenue crossover refunding bonds crossover refunding bonds Bonds issued for the purpose of paying off an existing bond issue. Crossover bonds are secured initially by the escrow of investments created from the crossover bond proceeds while the bonds to be refunded continue to be secured by (HealthEast Project), series 1993. |
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