Fitch Rates Pocono Medical Center, PA, Rev Bonds 'BBB+'; Affirms Outstanding.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. assigns a 'BBB+' rating to approximately $69.2 million of Monroe County Monroe County is the name of seventeen counties in the United States, named after President James Monroe:
(2) (PCI Mezzanine Card) A PCI-based mezzanine card that is widely adapted to VMEbus, CompactPCI and PCI cards. ) as listed at the end of this press release. The Rating Outlook is Stable. Bond proceeds will advance refund the entire 2003 series; reimburse PMC for prior capital projects; and fund routine maintenance, a debt service reserve fund, and the cost of issuance. The 2007 bonds are scheduled to price the week of June 11 through negotiation by Bear, Stearns & Co. Inc. The rating is based on PMC's strong liquidity, positive operating profitability trend, and leading market position in a growing service area. Liquidity for the rating category is strong as highlighted by 199.6 days cash on hand and 11.4 times (x) cushion ratio at June 30, 2006. Liquidity has been bolstered by continued improvement in operating and bottom line profitability in fiscal 2006 and will increase with this financing as approximately $15.2 million of cash will be added back to the balance sheet for reimbursement of prior capital expenditure. Income from operations was $6.1 million (3.5% operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: ) in fiscal 2006, and excess income was $8.6 million (4.9%) in the same period. Eight months interim (February) 2007 financial results also improved from the prior year with an operating margin of 4.0% compared to 1.6% in 2006. The improvement in operating performance can be attributed to stable inpatient volume trends, cost efficiency initiatives, and successful payor renegotiations. As a sole community provider, PMC maintains a leading 53.2% primary service area (PSA (Professional Services Automation) An information system designed to organize, track and manage all opportunities, work, resources, costs, revenues and invoices to improve the productivity and efficiency of the workforce. ) market share in a growing service area, which provides good leverage with commercial payors. Primary credit concerns include PMC's high debt burden, difficult environment for recruiting and retaining physicians, and outpatient competition. PMC's debt burden is above Fitch 'BBB' medians as indicated by a 56.8% 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 debt-to-capitalization ratio (including $27 million of additional debt from series 2007 bonds) and 5.3x pro forma debt-to-EBITDA in fiscal 2006. With this issuance, pro forma maximum annual debt service (MADS) coverage ratios drop below Fitch's 'BBB' medians with fiscal 2006 coverage by 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 2.8x. PMC's need to renovate its original facilities and the growing service area may exert further pressure on debt capacity as PMC may have to make renovations in the near term and expansions in the long term. Additionally, as PMC tries to grow its volume and scope of services, physician recruitment, which remains a challenge in the service area, may place pressure on operations. Outpatient surgeries fell 3.6% in fiscal 2006 from 3,436 to 3,312. A portion of this 3.6% decline in surgeries was diverted to an affiliated ambulatory center (44.7% owned by Pocono Health System, the sole member of PMC) whose surgery volume is reportedly rising. The Stable Rating Outlook is based on Fitch's belief that PMC will continue to post solid operating margins and build cash given the recently added capacity for high-margin services and physician alignment strategies through joint ventures. The fiscal 2007 budget projects $5.4 million of operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. (2.8% operating margin), which PMC expects to exceed. An upgrade may be warranted if PMC can maintain profitability while implementing its strategic initiatives which include recruiting key physicians, expanding service lines, stemming outmigration, and funding its capital plan. Conversely, a downgrade may be warranted if a sustained deterioration in liquidity occurs in concert with declines in volume and operating performance. PMC is a 233-licensed-bed sole community provider hospital located in East Stroudsburg, Pennsylvania East Stroudsburg is a borough in Monroe County, Pennsylvania, United States. It is located in the Poconos region of the state. Originally known as "Dansbury", East Stroudsburg was renamed for geographic reasons when the Delaware, Lackawanna, and Western Railroad opened a station , approximately 85 miles from Philadelphia. Total revenue was $174.1 million in fiscal 2006. PMC covenants to provide bondholders with annual and quarterly disclosure which it provides by posting to nationally recognized municipal securities information repositories (NRMSIRs). Quarterly disclosure includes a balance sheet, income statement, and utilization statistics, but no cash flow statement or management discussion. Outstanding debt affirmed at 'BBB+': --$35,000,000 Monroe County Hospital Authority, PA, revenue bonds (Pocono Medical Center), series 2003; --$16,175,000 Monroe County Hospital Authority, PA, revenue bonds (Pocono Medical Center), series 2002A (1); --$30,430,000 Monroe County Hospital Authority, PA, revenue bonds (Pocono Medical Center), series 2002B (1). (1) Represents an underlying rating. The bonds are insured by Radian ra·di·an n. Abbr. rad A unit of angular measure equal to the angle subtended at the center of a circle by an arc equal in length to the radius of the circle. Asset Assurance Co., which is rated 'AA' by Fitch Ratings. 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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