Fitch Affirms Palisades Med Ctr (NJ) Bonds at 'BBB-'; Outlook Negative.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 has affirmed the 'BBB-' rating on approximately $43.1 million New Jersey Health Care Facilities Financing Authority revenue bonds issued on behalf of Palisades Medical Center Palisades Medical Center is a regional hospital in North Bergen, New Jersey. The hospital has approximately 202 beds and serves approximately 350,000 people in Southern Bergen and Hudson counties. of New York Presbyterian Health System, Inc. 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 issue (as listed below). The Rating Outlook has been revised to Negative from Stable. The Negative Outlook is primarily due to Palisades Palisades, cliffs along the west bank of the Hudson River, NE N.J. and SE N.Y., extending from N of Jersey City, N.J., to the vicinity of Piermont, N.Y., with a general altitude of from 350 ft to 550 ft (107–168 m). Healthcare System, Inc.'s (Palisades) projected liquidity decline in fiscal 2006 related to its pension contribution, which will limit its financial flexibility, and future capital needs. The 'BBB-' rating is supported by Palisades' return to operating profitability in fiscal 2006, adequate debt service coverage, leading market share position and continued profitability of its skilled nursing facility skilled nursing facility n. Abbr. SNF An establishment that houses chronically ill, usually elderly patients, and provides long-term nursing care, rehabilitation, and other services. . In fiscal 2005, Palisades posted a negative 1% margin ($1.3 million), a decline from a 1.8% margin ($2.1 million) in fiscal 2004, but improved to a 1.9% margin through three months of fiscal 2006. The decline in 2005 operating performance was partly due to a 7.2% drop in discharges to 9,143 from 9,853, which reflects a mild winter and loss of discharges from a key admitter. The operating improvement in fiscal 2006 reflects increasing year-to-date discharges compared to the prior year period. Through three months of fiscal 2006, maximum annual debt service coverage from EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become was 2.8 times (x), an improvement from 2.3x in fiscal 2005. Palisades maintains a leading 33.4% market share in a fragmented service area, followed by St. Mary's Hospital (part of Bon Secours Health System; rated 'A-' by Fitch) at 19.4%. Uncertainty surrounding the future ownership of St Mary's has enabled Palisades to recruit physicians from this facility, which has supported favorable year-to-date utilization trends. In recent years, Palisades' skilled nursing facility has remained profitable, offsetting operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. at the hospital. Primary credit concerns are Palisades' expected liquidity decline in fiscal 2006 related to its pension contribution, future capital needs, change in its affiliation with New York Presbyterian Healthcare System (NYPHS), reliance on state grant revenue for profitability and its challenging payor mix. At fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. 2006, Palisades is projecting its unrestricted cash position to decline to $25 million (77.8 days cash on hand) due to an $8.9 million pension contribution. At March 31, 2006, Palisades had 100.8 days cash on hand and 75.4% cash to debt. Palisades' 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. has been low in recent years and averaged 87% of depreciation expense from fiscal 2001-2005, leading to an average age of plant of 12.7 years. Palisades has no additional debt plans and expects future capital spending to be routine in nature. Nevertheless, Fitch believes that future capital needs will be significant and pressure Palisades' liquidity cushion Liquidity Cushion A reserve fund for a company or person containing money market and highly liquid investments. Notes: This is a cushion used by large and small investors. . In April 2006, Palisades' relationship with NYPHS was changed to an affiliate membership from a sponsored membership, a looser affiliation in which Palisades will no longer benefit from NYPHS's leverage in managed care contract negotiations, which has fueled revenue growth. The earliest contract expirations are in fiscal 2007 and 2008. Palisades' decline in 2005 operating performance also reflects a decrease in state-level grant revenue to $455,000 in 2005 from $5.2 million in 2004, a $3.7 million increase from 2003 to offset a decrease in charity care payments from the New Jersey Health Care Subsidy Fund. In 2006, Palisades expects to receive $1 million in grant revenue; however Palisades' ability to secure state-level grant revenue remains an inherent risk. In 2005, Palisades' Medicaid load was high at 12% of gross revenues, which is indicative of Palisades' modest service area characteristics. The Negative Rating Outlook reflects Palisades' projected liquidity decline in fiscal 2006 related to its pension contribution, which will limit its financial flexibility in meeting future capital needs. Fitch expects the return to positive operating performance and increasing discharges to continue. Failure to maintain operating profitability in fiscal 2006 is likely to result in downward rating pressure. Palisades operates 202 licensed acute-care beds and 249 skilled nursing beds. Located in North Bergen North Ber·gen A community of northeast New Jersey north of Jersey City and across the Hudson River from Manhattan Island. Population: 59,500. , NJ, Palisades had total operating revenue operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. of approximately $129 million in fiscal 2005. Palisades covenants to provide to the NRMSIRs annual audited financial statements and quarterly disclosure consisting of a balance sheet, income statement, utilization statistics, and management discussion and analysis. There are no swaps outstanding. Outstanding Debt: --$14,470,000 New Jersey Health Care Facilities Financing Authority revenue bonds, Palisades Medical Center of New York Presbyterian Health System, Inc. obligated group issue, series 2002; --$28,630,000 New Jersey Health Care Facilities Financing Authority revenue bonds, Palisades Medical Center of New York Presbyterian Health System, Inc. obligated group issue, series 1999. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. 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 Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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