Fitch Affs South Ocean County Hosp, NJ Revs at 'BBB+'.Business Editors NEW YORK--(BUSINESS WIRE)--Feb. 24, 2004 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. today affirms the 'BBB+' rating on Southern Ocean County Hospital's (SOCH SOCH Southern Ocean County Hospital ) roughly $60.45 million in outstanding debt, issued by the New Jersey Health Care Facilities Financing Authority. The outstanding bond issues are listed below. The Rating Outlook is Stable. The 'BBB+' rating affirmation and stable outlook is based on South Ocean County Hospital's (SOCH) strong market position in its isolated, but growing service area, favorable utilization trends, and low average age of plant. SOCH's inpatient market share is stable in its primary service area. The southern region of Ocean County, N.J., is stable at 57.7% in 2002 from 57.5% in 1997. This compares to its nearest competitor, Community Medical Center, which had a 14.7% market share in 2002, slightly down from 16.2% in 1997. Fueled by a growing service area and the addition of services, discharges grew 12% to 7,142 in 2003 from 6,349 in fiscal year 2001. Inpatient utilization trends are expected to grow, as SOCH realizes the benefits of on-campus expansion and enhancements completed in 2002 and funded by the series 2001 bonds. In the past five years SOCH has averaged roughly 200% 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. to depreciation, resulting in a favorable 7.7 years average age of plant in 2003. Management indicated that there are no additional debt plans for the medium term. Credit risks include a high debt burden, low operating profitability, declining days cash on hand and increased competition for outpatient services outpatient services Hospital-based services Managed care Medical and other services provided, to a nonadmitted Pt, by a hospital or other qualified facility–eg, mental health clinic, rural health clinic, mobile X-ray unit, free-standing dialysis unit Examples . SOCH's high debt burden is indicated by Maximum annual debt service as a percent of revenue and cash to debt of 5.8% and 50.9% respectively in 2003. Though SOCH has turned an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. annually since 1999, operating margins are modest. SOCH posted a modest operating profit in 2003 (unaudited) of $1.3 million (1.5%). However, good non-operating gains resulted in excess income of $2.4 million (2.7%). While SOCH's liquidity grew to $31.6 million in 2003 from $26.7 million in 2000, days cash on hand has declined during this time from 178 to 151. The decline in days cash on hand was primarily driven by operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. growth including nurse labor costs, which are expected to rise, due in part to a nationwide nurse shortage and as SOCH nurses unionized in July 2003. Increasing competition from ambulatory surgery centers ambulatory surgery center A free-standing center that performs various types of surgery has resulted in near static outpatient surgeries, from 2,433 in 2000 to 2,442 in 2003. A new outpatient, physician-owned orthopedic specialty surgery center opened in 2003, 20 miles to the north of SOCH. However, Fitch notes that SOCH's Southern Ocean Surgery Center (SOSC SOSC Southern Oregon State College SOSC Smithsonian Oceanographic Sorting Center SOSC special operations support command (theater army) (US DoD) SOSC System Operational and Support Capability ), which is 49.5% owned by Compass, 49.5% owned by HealthSouth and 1% owned by surgeons there, has had a solid utilization record since opening in 1998. SOCH operates a 122-bed acute-care hospital, located in Manahawkin, N.J., approximately 60 miles east of Philadelphia and 90 miles south of New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . SOCH's disclosure is good, via covenanted, quarterly disclosure. While SOCH's 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 consists solely of the hospital, two other components in the SOCH health system are its foundation (SOCHF) and Compass Healthcare, which is a management services entity for affiliated physicians at SOCH. In fiscal 2003, the hospital accounted for 97% of the system's revenues and 81% of its assets. All of the financial information above represents the consolidated SOCH system. The 2001 and 1997 bonds were underwritten by PaineWebber (now UBS UBS Union Bank of Switzerland UBS United Bible Societies UBS United Blood Services UBS United Buying Service UBS Used Bookstore UBS University Business Services UBS Universal Building Society (UK) UBS Ulaanbaatar Broadcasting System Financial Services). Outstanding debt affirmed at 'BBB+': -- $21,987,652 New Jersey Health Care Facilities Financing Authority (NJ) (Southern Ocean County Hospital Issue) revenue bonds, series A (1993) (not insured); -- $25,033,707 New Jersey Health Care Facilities Financing Authority (NJ) (Southern Ocean County Hospital Issue) revenue bonds, series 2001 (insured: Radian Asset Assurance Inc.); -- $13,431,627 New Jersey Health Care Facilities Financing Authority (NJ) (Southern Ocean County Hospital) revenue bonds, series 1997 (insured: Financial Security Assurance, Inc.). |
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