Fitch Ratings Upgrades HealthEast - MN's- Bonds to 'BB+'.Business Editors NEW YORK--(BUSINESS WIRE)--Dec. 12, 2003 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 upgraded approximately $211 million revenue bonds issued on behalf of HealthEast and Controlled Affiliates (HealthEast) to 'BB+' from 'BB' (issues listed below). The Rating Outlook is Stable. The upgrade reflects HealthEast's improved financial performance exhibited over the last two years and most recent interim period with a return to operating profitability. Improved financial performance has been driven by increased managed care rates, rising volume, and improved performance at its new hospital, Woodwinds. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: improved to 1.6% in fiscal 2003 from negative 1.9% in fiscal 2001, and was 1.5% through the 2 months ended October 31, 2003. HealthEast is performing ahead of budget through the interim period and should meet its fiscal 2004 budget of 1.6%. Other credit strengths include a leading market position in St. Paul St. Paul as a missionary he fearlessly confronts the “perils of waters, of robbers, in the city, in the wilderness.” [N.T.: II Cor. 11:26] See : Bravery with 39% market share in fiscal 2003 compared to the next closest competitor United Hospital (part of Allina Health System, rated 'A-') with 29.7% market share. Market share has increased from the previous year driven by rising volume. Credit concerns include weak liquidity, future capital needs, and high managed care penetration. HealthEast's liquidity is light with 34.7 days cash on hand and 26.1% cash to debt at October 31, 2003 but has grown from 28.9 days cash on hand and 15.7% cash to debt at August 31, 2001. Liquidity growth has been hampered by significant 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. and bottom line losses in its recent history. Fitch believes balance sheet growth will be management's biggest challenge especially with major capital needs in the near future. St. Joseph's, located in downtown St. Paul requires major renovation and the system's average age of plant is high at 13 years. However, state of the art technological advances have been significant. HealthEast's payor mix comprises 53% of revenue from managed care payors, which is split between four major companies. Recent rate negotiations have been favorable, however, the sustained improvement of the system will depend on management's ability to continue securing favorable increases going forward. Fitch expects HealthEast to continue to improve its financial performance due to ongoing initiatives, which should sustain current operating profitability. However, balance sheet growth may be limited by capital needs. Headquartered in St. Paul, Minnesota, HealthEast is a large health care system providing inpatient and outpatient care, rehabilitation rehabilitation: see physical therapy. services, and senior care, as well as a variety of other ancillary services primarily through three acute care hospitals, one long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. hospital, two nursing homes, two ambulatory surgery centers ambulatory surgery center A free-standing center that performs various types of surgery , and 15 primary care clinics. The three acute care hospitals operate 530 of 649 licensed beds. Disclosure to Fitch and bondholders has been adequate with quarterly interim statements including a consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. and income statement. Outstanding debt: -- $48,159,000 Washington County Washington County is the name of 30 counties and one parish in the United States of America, all named for George Washington. It is the most common county name in the United States. Housing and Redevelopment Authority hospital facility revenue bonds (HealthEast Project) Series 1998; -- $29,211,000 City of St. Paul, MN Housing and Redevelopment Authority hospital facility revenue bonds (HealthEast Project) Series 1997; -- $16,760,000 City of Maplewood, MN, health care facility revenue bonds (HealthEast Project) Series 1996; -- $18,538,000 City of South St. Paul, MN Housing and Redevelopment Authority Noun 1. redevelopment authority - a public administrative unit given responsibility for the renovation of blighted urban areas administrative body, administrative unit - a unit with administrative responsibilities hospital facility revenue refunding bonds (HealthEast Project) Series 1994; -- $99,427,000 City of St. Paul, MN Housing and Redevelopment Authority hospital facility revenue crossover refunding bonds crossover refunding bonds Bonds issued for the purpose of paying off an existing bond issue. Crossover bonds are secured initially by the escrow of investments created from the crossover bond proceeds while the bonds to be refunded continue to be secured by (HealthEast Project), Series 1993. |
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