Fitch Affirms Palisades Med Ctr New Jersey $43.1MM Bonds 'BBB-'; Outlook Stable.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 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 is Stable. The 'BBB-' rating is supported by 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) solid debt service coverage, positive utilization trends, leading market share position, and its affiliation with New York Presbyterian Healthcare System, Inc. (NYPHS). In 2004, maximum annual debt service (MADS) 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 solid at 2.9 times (x), resulting from strong bottom-line profitability of $3.2 million (2.6% excess margin). From 2003-2004, inpatient discharges excluding newborns increased 3.6% to 9,853 from 9,512, which was supported by continued growth of Palisades' active medical staff. Palisades maintains a leading 33.4% market share in a fragmented service area, followed by St. Marys Hospital (part of Bon Secours Health System; rated 'A-' by Fitch) at 19.4%. Benefits from Palisades' affiliation with NYPHS include improved managed care contracts, which have supported recent revenue growth. Primary credit concerns are Palisades' future 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. , reliance on state grant revenue for profitability, challenging payor mix, and light liquidity position relative to debt. Palisades' capital spending as a percentage of depreciation expense averaged a low 72% from fiscal 2002-2004, which led to a high average age of plant of 12.2 years in 2004. As a result, Fitch expects Palisades' capital needs to be significant over the medium term. Palisades posted a 1.8% operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: ($2.1 million gain) in 2004, increasing from a 0.1% margin in 2003. Fitch notes that the improvement in 2004 was driven by a $3.7 million increase in grant revenue from the State of New Jersey ($5.2 million total) to offset a decrease in charity care payments from the New Jersey Health Care Subsidy Fund. Going forward, Palisades' ability to secure state-level grant revenue is unknown. Excluding the increase in grant revenue, Palisades had a negative 1.3% operating margin in 2004. In 2004, Palisades' Medicaid load was high at 15% of gross revenues, an increase from 12% in 2003, indicative of Palisades' modest service area characteristics. Palisades' cash-to-debt ratio as of Dec. 31, 2004 was low at 72.2%, although it has improved from 34.9% 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. 2002 due to improved cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses and limited capital spending. The Stable Rating Outlook reflects Fitch's belief that positive utilization trends and continued success in physician recruitment should support positive operating profitability without a significant reliance on state grant revenue. However, Fitch believes additional growth of Palisades' liquid reserves may be hindered by future capital spending. Palisades does not expect to issue additional debt over the medium term. Palisades operates 202 licensed acute-care beds and 249 skilled nursing beds. Located in North Bergen, NJ, Palisades had total operating revenue of approximately $123 million in fiscal 2004. Palisades covenants to provide to bondholders annual audit financial statements and quarterly disclosure consisting of a balance sheet, income statement, utilization statistics, and management discussion and analysis. Disclosure to Fitch has been adequate and timely. 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 are available on the agency's public web site, www.fitchratings.com. Published ratings, criteria and methodologies and 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 this site, at all times. This document will remain on the public site for seven days. |
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