Fitch Rates Adventist Health System/Sunbelt FL 'A+'; Affirms Outstanding.

TAMPA, Fla. -- Fitch Ratings assigns an 'A+' rating to Adventist Health System/Sunbelt, Florida, series 2005 E-I bonds and affirms the outstanding debt as listed below. The Rating Outlook is Stable.

Fitch rates the following 'A+':

--$62.5 million Highlands County, FL, Health Facilities Authority hospital revenue bonds, auction reset securities, series 2005 E;

--$62.5 million Highlands County, FL, Health Facilities Authority hospital revenue bonds, auction reset securities, series 2005 F;

--$50 million Highlands County, FL, Health Facilities Authority hospital revenue bonds, auction reset securities, series 2005 G;

--$50 million Highlands County, FL, Health Facilities Authority hospital revenue bonds, auction reset securities, series 2005 H.

--$185 million Highlands County, FL, Health Facilities Authority hospital revenue refunding bonds, long-term adjustable-rate securities, series 2005 I.

Proceeds of the series 2005 E-H bonds will be used to fund various capital expenditures throughout the System. The 2005 I bonds will be used to advance refund the System's series 1999 bonds.

Fitch also affirms the 'A+' rating to Adventist's outstanding debt listed below. The Rating Outlook is Stable. The bonds are expected to be priced the week of Dec. 6, through negotiation, led by Ziegler Capital Markets Group.

Fitch also affirms the 'F1' short-term rating on the $68 million series 2003C bonds and the $85 million series 2002 bonds. The 'F1' rating is based on Adventist's strong internal liquidity position and management's procedures in place to access funds in case of an un-remarketed put. Adventist has solid liquidity with approximately $2.27 billion as of Sept. 30, 2005. Of the $2.27 billion, approximately $1.4 billion was invested in short-duration high-grade fixed-income and money market funds, which Fitch views as highly liquid. Fitch believes Adventist's treasury function is sophisticated, with a dedicated staff of three full-time traders and a trading desk in the system's headquarters.

The 'A+' rating is based on Adventist Health System/Sunbelt's (Adventist) improved financial profile, increased revenue diversity, and strong management practices. Since Fitch's initial rating in September 2003, Adventist has demonstrated continued improvement in profitability and cash flow that has led to a stronger liquidity position. Total revenue has increased at an average annual rate of 18% over the last four years due to volume growth, new facilities, and renegotiation of managed care contracts. Operating margin increased to 4.0% in fiscal year 2004 from 2.4% in fiscal 2000. Strong cash flow of $621 million in fiscal 2004 has led to solid debt service coverage of 3.3 times (x) and was 3.5x through the nine months ended Sept. 30, 2005. Nine-month fiscal 2005 financial performance is ahead of budget. Adventist's liquidity position has also improved to 219 days cash on hand and 92% cash to debt at Sept. 30, 2005 from 133.9 days cash on hand and 45.5% cash to debt at fiscal year-end 2000. The system has improved its revenue and profitability diversity with the Florida Hospital division comprising approximately 40% of the system's EBITDA thus far in fiscal 2005 from 53% in 1999. Fitch views Adventist's management practices favorably due to its success in integrating new facilities and improving operational performance in a short period of time. Financial disclosure and reporting capabilities are also one of the best in Fitch's portfolio. Other best-management practices include asset liability management, managing the investment portfolio as a business unit, implementing a formal capital allocation model, and focus on quality initiatives.

Credit concerns remain Adventist's above-average debt burden, future capital needs, the competitive Denver market, and rising malpractice costs. Adventist's debt burden is somewhat high with pro forma maximum annual debt service (MADS) at approximately 5.0% of total revenue and debt to capitalization of 52%. However, debt ratios have improved since 1999. Most of Adventist's facilities are located in fast-growing service areas, most notably the Orlando area. Management will be challenged with balancing the need for additional capacity due to increased demand; the Orlando region anticipates adding 500 beds over the next five years. Fitch is concerned about the competitive environment of the Denver market. However, financial performance at the Denver facilities is showing improvement through the nine months ended Sept. 30, 2005. Fitch believes there will be more pressure in this market for reinvestment in plant due to the competition in the area. Adventist is exposed to the rising malpractice premium environment, especially in Florida, that has not only increased costs but has caused physician recruitment and retention challenges.

Fitch believes that, given Adventist Health System's size and diversification, formal implementation of Sarbanes Oxley (SOX) is necessary, particularly Section 404, which deals with the evaluation of internal controls. Adventist has not formerly implemented the provisions of SOX at this time.

Adventist Health System has utilized numerous derivative instruments totaling a notional amount of approximately $2.3 billion. As of early November 2005, the mark to market value of AHS' derivative portfolio was negative $86 million. AHS utilizes multiple counterparties, which Fitch views favorably. Although the current market value of AHS' derivative instruments is negative, Fitch believes that AHS' sophisticated treasury function, favorable termination provisions, sound cash position, and excellent monitoring system of its derivatives serve to mitigate the risk of large termination payments. AHS' derivative strategy is based on attaining lower cost of capital while in a rising interest rate environment. Fitch believes AHS has the balance sheet strength and management expertise to employ an aggressive derivative strategy.

The Rating Outlook is Stable. Fitch believes AHS' financial performance will continue to exhibit an improving trend over the near term.

Headquartered in Winter Park, FL, Adventist operates 38 hospitals in 10 states. The Florida Hospital region made up 36.1% of net operating revenue of the system through the nine months ended Sept. 30, 2005 and includes the largest hospital in the U.S., Florida Hospital Orlando. Adventist covenants to provide bondholders with unaudited quarterly statements within 45 days of quarter-end and audited annual statements within 150 days of fiscal year-end. Adventist's annual and quarterly disclosure is posted on DAC, which Fitch also views favorably.

Outstanding debt rated 'A+' by Fitch as follows:

--$33,000,000 Orange County, FL Health Facilities Authority Hospital revenue bonds, series 1991A (Adventist Health System/Sunbelt, Inc.) (1);

--$3,990,000 The Health and Educational Facilities Board of the Metropolitan Government of Nashville and Davidson County, TN Hospital revenue bonds, series 1991 (Adventist Health System/Sunbelt, Inc.) (2);

--$35,800,000 Orange County, FL Health Facilities Authority Hospital revenue bonds, series 1992 (Adventist Health System/Sunbelt, Inc.) (2);

--$1,700,000 Tarrant County, Texas Health Facilities Development Corporation Hospital revenue bonds, series 1992 (Adventist Health System/Sunbelt, Inc.) (2);

--$9,145,000 City of Altamonte Springs, FL Health Facilities Authority Hospital Revenue Refunding Bonds, series 1993A (Adventist Health System/Sunbelt, Inc.) (3);

--$59,310,000 City of Altamonte Springs, FL Health Facilities Authority Hospital revenue bonds, series 1993B (Adventist Health System/Sunbelt, Inc.) (1), (5);

--$5,735,000 Tarrant County, TX Health Facilities Development Corporation Hospital revenue bonds, series 1993 (Adventist Health System/Sunbelt, Inc.) (2), (5);

--$4,565,000 The Health and Educational Facilities Board of the Metropolitan Government of Nashville and Davidson County, TN Hospital revenue bonds, series 1993 (Adventist Health System/Sunbelt, Inc.) (2), (5);

--$32,550,000 Volusia County, FL Health Facilities Authority Hospital Facilities revenue refunding and improvement bonds, series 1994 (Memorial Health Systems Project) (1);

--$149,185,000 Orange County, FL Health Facilities Authority Hospital revenue bonds, series 1995 (Adventist Health System/Sunbelt Obligated Group) (1);

--$6,155,000 Hospital Authority of Gordon County, GA revenue anticipation certificates, series 1995 (Adventist Health System/Sunbelt Obligated Group) (3);

--$4,795,000 Tarrant County, TX Health Facilities Development Corporation hospital revenue bonds, series 1995 (Adventist Health System/Sunbelt Obligated Group) (3);

--$24,005,000 Copperas Cove, TX Health Facilities Development Corporation hospital revenue bonds, series 1995 (Adventist Health System/Sunbelt Obligated Group) (3);

--$4,375,000 The Health and Educational Facilities Board of the Metropolitan Government of Nashville and Davidson County, TN hospital revenue bonds, series 1995 (Adventist Health System/Sunbelt Obligated Group) (3);

--$15,425,000 Hospital Authority of the City of Smyrna GA Revenue Certificates (Emory-Adventist Hospital at Smyrna Project), series 1996 (1);

--$42,280,000 Volusia County, FL Health Facilities Authority hospital facilities revenue bonds, series 1996 (Memorial Health Systems Project) (1);

--$101,190,000 Highlands County, FL Health Facilities Authority hospital revenue bonds, series 1998 (Adventist Health System/Sunbelt Obligated Group);

--$14,535,000 Tarrant County, TX Health Facilities Development Corporation hospital revenue bonds, series 1998 (Adventist Health System/Sunbelt Obligated Group);

--$3,690,000 The Health and Educational Facilities Board of the Metropolitan Government of Nashville and Davidson County, TN hospital revenue bonds, series 1998 (Adventist Health System/Sunbelt Obligated Group);

--$187,805,000 Illinois Development Finance Authority hospital revenue bonds, series 1999 (Adventist Health System/Sunbelt Obligated Group);

--$54,625,000 Illinois Development Finance Authority hospital revenue bonds, series 2000A (3);

--$67,465,000 Orange County, FL Health Facilities Authority hospital revenue bonds, series 2000 (5);

--$32,180,000 Tarrant County, TX Health Facilities Development Corp. hospital revenue bonds, series 2000 (5);

--$10,255,000 Health and Educational Facilities Board of the Metropolitan Government of Nashville and Davidson County, TN hospital revenue bonds, series 2000 (5);

--$60,000,000 Illinois Development Finance Authority hospital revenue bonds periodic auction-rate securities (PARS), series 2000B (3);

--$60,000,000 Colorado Health Facilities Authority hospital revenue bonds (PorterCare Adventist Health System Project), series 2001 (5);

--$165,190,000 Highlands County, FL Health Facilities Authority hospital revenue bonds, series 2001A (Adventist Health System/Sunbelt Obligated Group);

--$59,700,000 Highlands County FL Health Facilities Authority Hospital revenue bonds, series 2001B (Adventist Health System/Sunbelt Obligated Group) periodic auction reset securities (PARS) (1);

--$160,000,000 Orange County, FL Health Facilities Authority hospital revenue bonds, series 2002 (Adventist Health System/Sunbelt Obligated Group);

--$70,215,000 Highlands County, FL Health Facilities Authority hospital revenue bonds, series 2002B (Adventist Health System/Sunbelt Obligated Group);

--$145,000,000 Highlands County Health Facilities Authority hospital revenue bonds, series 2003D (Adventist Health System/Sunbelt Obligated Group);

--$50,000,000 Highlands County Health Facilities Authority hospital revenue bonds, series 2004A (Adventist Health System/Sunbelt Obligated Group) auction reset securities A+

The following are affirmed at 'A+/F1' by Fitch:

--$85,000,000 Highlands County Health Facilities Authority hospital revenue bonds, series 2002 (Adventist Health System/Sunbelt Obligated Group) long-term adjustable securities extendable rate (LASERS);

--$68,095,000 Highlands County Health Facilities Authority hospital revenue bonds, series 2003C (Adventist Health System/Sunbelt Obligated Group);

--$64.345 million Highlands County, FL, Health Facilities Authority hospital revenue refunding bonds series 2005 A;

--$105.99 million Highlands County, FL, Health Facilities Authority hospital revenue refunding bonds series 2005 B;

--$62.46 million Highlands County, FL, Health Facilities Authority hospital revenue refunding bonds series 2005 C;

--$100 million Highlands County, FL, Health Facilities Authority hospital revenue bonds series 2005 D.

Other issues rated by Fitch:

--$68,015,000 Highlands County Health Facilities Authority hospital revenue bonds, series 2003B (Adventist Health System/Sunbelt Obligated Group) (4);

--$50,000,000 Colorado Health Facilities Authority hospital revenue bonds, series 2004B (Adventist Health System/Sunbelt Obligated Group) variable-rate demand bonds (4);

--$50,000,000 Kansas Development Finance Authority hospital revenue bonds, series 2004C (Adventist Health System/Sunbelt Obligated Group) variable-rate demand bonds (4)

(1) Insured by Ambac Assurance Corp., whose insurer financial strength is rated 'AAA' by Fitch.

(2) Insured by Financial Security Assurance, Inc., whose insurer financial strength is rated 'AAA' by Fitch.

(3) Insured by MBIA Insurance Corp., whose insurer financial strength is rated 'AAA' by Fitch.

(4) Rating based on a letter of credit provided by SunTrust Bank.

(5) Bonds to be refunded with the proceeds of the 2005 A-C bonds.

Fitch's rating definitions and the terms of use 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 are also available from the 'Code of Conduct' section of this site.