Fitch Rates Adventist Health System Sunbelt (Florida) 2006D-F 'A+'; 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 assigned its 'A+' rating to Adventist Health System/Sunbelt's (Adventist) $271.4 million Colorado Health Facilities Authority hospital revenue bonds Hospital revenue bond A bond issued to finance construction of a hospital by a municipal or state agency. hospital revenue bond Tax-exempt debt issued by a city, county, state, or hospital authority with debt service guaranteed by hospital , series 2006 D-F. Proceeds of the series 2006 D-F bonds will be used to refund the Adventist's outstanding series 1995, 1998, and 2003 D bonds listed below. Fitch also affirms its 'A+' rating to Adventist's outstanding debt listed at the end of this press release. The Rating Outlook is Stable. The bonds are expected to be priced the week of October 16th, through negotiation, led by Ziegler Capital Markets Group. -- $5,820,000 Hospital Authority of Gordon County, GA revenue anticipation certificates, series 1995 (Adventist Health System/Sunbelt 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) 'A+' -- $4,350,000 Tarrant County, TX Health Facilities Development Corporation hospital revenue bonds, series 1995 (Adventist Health System/Sunbelt Obligated Group) 'A+' -- $22,725,000 Copperas Cove Copperas Cove (kŏp`ərəs), town (1990 pop. 24,079), Coryell co., central Tex. In a farm and ranch area, the town owes much of its existence to U.S. Fort Hood, which it adjoins. , TX Health Facilities Development Corporation hospital revenue bonds, series 1995 (Adventist Health System/Sunbelt Obligated Group) 'A+' -- $99,465,000 Highlands County, FL Health Facilities Authority hospital revenue bonds, series 1998 (Adventist Health System/Sunbelt Obligated Group) 'A+' -- $14,535,000 Tarrant County, TX Health Facilities Development Corporation hospital revenue bonds, series 1998 (Adventist Health System/Sunbelt Obligated Group) 'A+' -- $1,705,000 The Health and Educational Facilities Board of the Metropolitan Government of Nashville and Davidson County Davidson County is the name of two counties in the United States:
-- $145,000,000 Highlands County Health Facilities Authority hospital revenue bonds, series 2003D (Adventist Health System/Sunbelt Obligated Group) 'A+'; In addition, Fitch affirms its 'F1+' short-term rating on Adventist's $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 unremarketed put. Adventist has solid liquidity with $2.17 billion as of June 30, 2006, net of short term debt. Of the $2.17 billion, $1.16 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 nine full-time professionals and a trading desk Trading Desk A desk where transactions for buying and selling securities occur. Trading desks can be found in most organizations (banks, finance companies, etc.) involved in trading investment instruments such as equities, fixed-income securities, futures, commodities and foreign in the company's headquarters. The 'A+' rating is based on Adventist's 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 continues to increase over the prior year although at a slower rate as overall volume growth has been more moderate. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: through June continues to improve rising to 5.3% through June from 4.6% in fiscal 2005. Strong 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 of $381million thus far in 2006 has led to solid debt service coverage of 3.8 times (x). Fitch views Adventist's management practices favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. due to its success in integrating new facilities and improving operational performance in a short period. 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, competitive Denver market, and rising malpractice malpractice, failure to provide professional services with the skill usually exhibited by responsible and careful members of the profession, resulting in injury, loss, or damage to the party contracting those services. costs. Adventist's debt burden is somewhat high with pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma maximum annual debt service (MADS) at approximately 4.2% of total revenue and debt to capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. of 51.7%. 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 and maintaining solid liquidity and debt ratios. 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 continues to show favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. results through June 2006. Fitch believes that formal implementation of all relevant provisions of Sarbanes Oxley (SOX (1) (Schema for Object-oriented XML) An XML schema developed by Veo Systems and Muzino Communications, which was submitted to the W3C. SOX is based on DTD, but adds data typing and reuse mechanisms. ) is a best management practice. Adventist has not formerly implemented the provisions of SOX at this time. However, Fitch believes that management has taken action to standardize stan·dard·ize v. 1. To cause to conform to a standard. 2. To evaluate by comparing with a standard. internal controls in financial reporting particularly in revenue recognition. Fitch views this positively. Adventist Health System The Adventist Health System is the organisation responsible for overseeing matters related to Hospitals and other medical facilities, related to the Seventh-day Adventist Church within the United States. has utilized numerous derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. totaling a notional amount The notional amount (or notional principal amount or notional value) on a financial instrument is the nominal or face amount that is used to calculate payments made on that instrument. This amount generally does not change hands and is thus referred to as notional. of approximately $ 2.314 billion. As of June 30, 2006, the mark to market value of Adventist's derivative portfolio was negative $22.1 million. Adventist utilizes multiple counterparties Counterparties The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. , which Fitch views favorably. Although the current market value of derivative instruments is negative, Fitch believes that Adventist's 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. Adventist's derivative strategy is based on attaining lower cost of capital while in a rising interest rate environment. Fitch believes Adventist has the balance sheet strength and management expertise to employ an aggressive derivative strategy. The Rating Outlook is Stable. Fitch believes Adventist's financial performance will continue to exhibit an improving trend over the near term. Headquartered in Winter Park, FL, Adventist operates 36 hospitals in ten states. The Florida division comprised 56.8% of net 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 the system in fiscal 2005 and includes the largest hospital in the U.S., Florida Hospital Orlando Located in Orlando, Florida, Florida Hospital Orlando uses the latest technology to treat over 32,000 inpatients and 53,600 outpatients annually. This 800+ bed, acute-care community hospital also serves as a major tertiary facility for much of the Southeast. . 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 disclosure to the NRMSIRs occurs both annually and quarterly, which Fitch views favorably. Outstanding Debt: -- $33,000,000 Orange County, FL Health Facilities Authority hospital revenue bonds, series 1991A (Adventist Health System/Sunbelt, Inc.) (1) 'A+'; -- $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) 'A+'; -- $35,800,000 Orange County, FL Health Facilities Authority hospital revenue bonds, series 1992 (Adventist Health System/Sunbelt, Inc.) (2) 'A+'; -- $1,505,000 Tarrant County, Texas Tarrant County is a county located in the U.S. state of Texas. As of 2000, the population was 1,446,219. Its county seat is Fort Worth6. Tarrant County is the second most populous county in the Dallas/Fort Worth Metroplex and contains its second largest principal city. Health Facilities Development Corporation hospital revenue bonds, series 1992 (Adventist Health System/Sunbelt, Inc.) (2) 'A+'; -- $32,550,000 Volusia County, FL Health Facilities Authority Hospital Facilities revenue refunding and improvement bonds, series 1994 (Memorial Health Systems Project) (1) 'A+'; -- $149,185,000 Orange County, FL Health Facilities Authority hospital revenue bonds, series 1995 (Adventist Health System/Sunbelt Obligated Group) (1) 'A+'; -- $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) -- $15,425,000 Hospital Authority of the City of Smyrna GA Revenue Certificates (Emory-Adventist Hospital at Smyrna Project), Series 1996 (1) 'A+'; -- $42,280,000 Volusia County, FL Health Facilities Authority hospital facilities revenue bonds, series 1996 (Memorial Health Systems Project) (1) 'A+'; --$54,625,000 Illinois Development Finance Authority hospital revenue bonds, series 2000A (3) 'A+'; --$60,000,000 Illinois Development Finance Authority hospital revenue bonds periodic auction rate securities (PARS), series 2000B (3) 'A+'; --$59,700,000 Highlands County FL Health Facilities Authority hospital revenue bonds, series 2001B (Adventist Health System/Sunbelt Obligated Group) periodic auction rate securities (PARS) (1) 'A+'; --$160,000,000 Orange County, FL Health Facilities Authority hospital revenue bonds, series 2002 (Adventist Health System/Sunbelt Obligated Group) 'A+'; -- $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) 'A+/F1+'; --$70,215,000 Highlands County, FL Health Facilities Authority hospital revenue bonds, series 2002B (Adventist Health System/Sunbelt Obligated Group) 'A+'; --$68,095,000 Highlands County Health Facilities Authority hospital revenue bonds, series 2003C (Adventist Health System/Sunbelt Obligated Group) 'A+/F1+'; --$50,000,000 Highlands County Health Facilities Authority hospital revenue bonds, series 2004A (Adventist Health System/Sunbelt Obligated Group) auction reset securities 'A+'; -- $64,345,000 Highlands County, FL Health Facilities Authority hospital revenue 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. , series 2005A (Adventist Health System/Sunbelt Obligated Group) 'A+'; -- $105,990,000 Highlands County, FL Health Facilities Authority hospital revenue refunding bonds, series 2005B (Adventist Health System/Sunbelt Obligated Group) 'A+'; -- $62,460,000 Highlands County, FL Health Facilities Authority hospital revenue refunding bonds, series 2005C (Adventist Health System/Sunbelt Obligated Group) 'A+'; -- $100,000,000 Highlands County, FL Health Facilities Authority hospital revenue refunding bonds, series 2005D (Adventist Health System/Sunbelt Obligated Group) 'A+'; -- $62,500,000 Highlands County, FL Health Facilities Authority hospital revenue bonds, auction reset securities, series 2005 E (Adventist Health System/Sunbelt Obligated Group) 'A+'; -- $62,500,000 Highlands County, FL Health Facilities Authority hospital revenue bonds, auction reset securities, series 2005 F (Adventist Health System/Sunbelt Obligated Group) 'A+'; -- $50,000,000 Highlands County, FL Health Facilities Authority hospital revenue bonds, auction reset securities, series 2005 G (Adventist Health System/Sunbelt Obligated Group) 'A+'; -- $50,000,000 Highlands County, FL Health Facilities Authority hospital revenue bonds, auction reset securities, series 2005 H (Adventist Health System/Sunbelt Obligated Group) 'A+'; -- $185,000,000 Highlands County, FL Health Facilities Authority hospital revenue refunding bonds, long-term adjustable-rate securities, series 2005 I 'A+'; -- $85,955,000 Highlands County, FL, Health Facilities Authority hospital revenue refunding bonds series 2006 A 'A+'; -- $85,955,000 Highlands County, FL, Health Facilities Authority hospital revenue refunding bonds series 2006 B 'A+'. (1) Insured by Ambac Assurance Corp., whose insurer financial strength is rated 'AAA' by Fitch Ratings. (2) Insured by Financial Security Assurance, Inc., whose insurer financial strength is rated 'AAA' by Fitch. (3) Insured by 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 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 cash defeased simultaneously with the issuance of series 2006 D. 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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