Fitch Affirms Mercy Health Services - MI - Bonds At `AA-'.Business Editors
NEW YORK--(BUSINESS WIRE)--July 6, 2000
Fitch affirms its `AA-' underlying and unenhanced ratings on approximately $601 million of Mercy Health Services health services Managed care The benefits covered under a health contract Obligated ob·li·gate
tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates
1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force.
2. To cause to be grateful or indebted; oblige. Group's (MHSOG) existing debt.
The underlying rating reflects the credit quality of the bonds without insurance. Certain issues are insured by Ambac, FSA FSA Financial Services Authority
FSA Food Standards Agency (UK)
FSA Farm Service Agency (USDA)
FSA Financial Services Agency (Japan) and MBIA MBIA Montana Building Industry Association
MBIA Municipal Bond Insurance Association
MBIA Michigan Boating Industries Association
MBIA Municipal Bond Investors Assurance
MBIA Massachusetts Brain Injury Association
MBIA Maryland Business Incubation Association , whose claims-paying ability is rated `AAA'. The affected issues are listed at the end of this release.
Effective May 1, 2000 Mercy Health Services, Inc. (MHS (1) (Message Handling Service) An earlier messaging system from Novell that supported multiple operating systems and other messaging protocols, including SMTP, SNADS and X.400. It used the SMF-71 messaging format. ) (rated `AA-' by Fitch) merged with Holy Cross Health System Corp. (not rated by Fitch) to create Trinity Health Trinity Health is an American healthcare provider headquartered in Minot, North Dakota. Trinity is a non-profit organization. Trinity has a 150+ physician medical group. . A corporate parent legal structure has been established and under Trinity Health's master trust indenture An agreement declaring the benefits and obligations of two or more parties, often applicable in the context of Bankruptcy and bond trading.
The term indenture primarily describes secured contracts and has several applications in U.S. law. and MHS is a designated affiliate. With this structure, Trinity Health has the ability to upstream funds from MHS. It should be noted, however, that MHS's joint and several obligated group legal structure will be maintained for at least one year and no new debt will be issued under this master trust indenture. It is Fitch's interpretation that MHS's debt service will be paid prior to any potential upstreaming of funds to Trinity Health. Nonetheless, Fitch has based its credit analysis of MHS on the newly created entity. Fitch anticipates assigning a formal rating to Trinity Health's next bond issue.
The `AA-' rating is supported by Trinity Health's strong debt service coverage, geographic diversity, consistent profitability, strong management team and low debt burden. Debt service coverage for the combined organization based on unaudited financial statements for fiscal 1998, 1999 and for 7 months ended Jan. 31, 2000 has remained strong, with coverage greater than 3.5 times (x). Trinity Health benefits from geographic diversity with facilities in 7 states, including Michigan, Iowa, Indiana, Maryland, Idaho, Ohio, and California. Historical performance at Trinity Health has remained solid with operating margins Operating Margin
A ratio used to measure a company's pricing strategy and operating efficiency.
Calculated by: over 1.5% and excess margins over 5.5% over the last two years. Year to date 2000 operating and excess margins were 1.0% and 3.5%, respectively (excluding several one- time restructuring charges restructuring charge
The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , including the closure of Mercy Detroit Hospital and merger costs). Trinity Health's debt load is light with maximum annual debt service as a percentage of revenues of 3.0%.
Credit concerns include Trinity Health's light liquidity position (in relation to its rating category), increasing revenue pressures, the competitive southeastern Michigan and Fresno, California “Fresno” redirects here. For other uses, see Fresno (disambiguation).
Fresno is the sixth-largest city in California and the county seat of Fresno County, with an official Census Bureau estimated population of 481,035 as of July 1, 2006. markets, and its weaker fiscal 2000 performance. Trinity Health's liquidity indicators are below Fitch's `AA' medians. At Jan. 31, 2000, Trinity Health maintained days cash on hand of 160, cushion ratio of 13.2x and a cash to debt position of 117%. Managed care payors and the Balanced Budget Balanced budget
A budget in which the income equals expenditure. See: budget.
A budget in which the expenditures incurred during a given period are matched by revenues. Act of 1997 have continued to place pressures on Trinity Health revenue streams, as can be seen by the slowing of revenue growth. Although Trinity Health is recognized as a market leader in southeastern Michigan, its local markets remain competitive. Additionally, the Fresno, California market is a sizable system drain. However, management anticipates renegotiating a significant managed care contract in the near future which should result in improved operations for this affiliate. Lastly, fiscal 2000 operating performance is expected to be impaired by almost $100 million of one-time costs associated with the closure of Mercy Detroit. However, Fitch believes that Trinity Health's strong management team and proactive strategy should result in improved performance and related debt service coverage in the future.
Mercy Health Services is comprised of 39 hospitals and other healthcare related entities located primarily throughout Michigan, Iowa and other contiguous states.
Trinity Health, the sole corporate member of MHS is the sixth largest system in the U.S. based on revenues and is comprised of 58 owned or managed acute care hospitals and other related healthcare entities located in 7 states.
Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual headquartered in 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 and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide. The agency, which is a combination of Fitch IBCA IBCA International Braille Chess Association
IBCA Institute of Burial and Cremation Administration
IBCA Integrated Business Communications Alliance
IBCA International Barbeque Cookers Association
IBCA Department of Interior Board of Contract Appeals and Duff & Phelps Credit Rating Co., provides ratings for Financial Institutions, Insurance, Corporates, Structured Finance, Sovereigns and Public Finance Markets worldwide.
-- $70,915,000 Michigan State Hospital Finance Authority, Revenue
and Refunding Bonds refunding bond
A bond that is issued for the purpose of retiring an outstanding bond. Issuers refund bond issues to reduce financing costs, eliminate covenants, and alter maturities. See also crossover refunding bonds, prerefunding. (Mercy Health Services Obligated Group),
Series 1999X (MBIA insured).
-- $44,695,000 Michigan State Hospital Finance Authority, Revenue
Refunding Bonds (Mercy Health Services Obligated Group),
Series 1997S (MBIA insured)(NOTE A).
-- $58,395,000 Michigan State Hospital Finance Authority, Revenue
Refunding Bonds (Mercy Health Services Obligated Group),
Series 1997T (MBIA insured)(NOTE A).
-- $18,220,000 Michigan State Hospital Finance Authority, Revenue
Bonds (Mercy Health Services Obligated Group), Series 1997U
(MBIA insured)(NOTE A).
-- $39,585,000 Iowa Finance Authority, Revenue Refunding Bonds
(Mercy Health Services Obligated Group), Series 1997V (FSA
-- $45,935,000 Michigan State Hospital Finance Authority, Revenue
Bonds (Mercy Health Services Obligated Group), Series 1997W
(FSA insured)(NOTE A).
-- $44,255,000 Michigan State Hospital Finance Authority, Revenue
Bonds (Mercy Health Services Obligated Group), Series 1996Q
(Ambac insured)(NOTE A).
-- $26,450,000 Michigan State Hospital Finance Authority, Revenue
Bonds (Mercy Health Services Obligated Group), Series 1996R
(Ambac insured)(NOTE A).
-- $30,695,000 Sioux City, Iowa <noinclude></noinclude>
Sioux City (IPA: [su: 'sɪti]) is a city located in northwest Iowa in the United States. As of the 2000 census, the city had a total population of 85,013. , Revenue Refunding Bonds (Sisters
of Mercy Health Services Corporation Obligated Group), Series
1993O (MBIA insured).
-- $130,630,000 Michigan State Hospital Finance Authority,
Revenue Refunding Bonds (Sisters of Mercy (R. C. Ch.) a religious order founded in Dublin in the year 1827. Communities of the same name have since been established in various American cities. The duties of those belonging to the order are, to attend lying-in hospitals, to superintend the education of girls, and protect Health Corporation
Obligated Group), Series 1993P (MBIA insured)(NOTE A).
-- $71,765,000 Michigan State Hospital Finance Authority, Revenue
Refunding Bonds (Sisters of Mercy Health Corporation Obligated
Group), Series 1992M.
-- $18,085,000 Iowa Finance Authority, Revenue Bonds (Sisters of
Mercy Health Corporation Obligated Group), Series 1992N.
-- $2,360,000 Michigan State Hospital Finance Authority, Revenue
Bonds (Sisters of Mercy Health Corporation), Series 1991J.
NOTE A: Certain maturities of the above issues are unenhan