Fitch Revises BRCH Corp. Florida's Outlook to Positive; Affirms Bonds at 'A-'.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 affirms the 'A-' rating on BRCH BRCH Boca Raton Community Hospital BRCH Birth Rate of Chapel Hill (Carolina Environmental Program ) Corp.'s outstanding $129.9 million of 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 (as listed below). The Rating Outlook is revised to Positive from Stable. E[acute accent acute accent n. A mark (´) indicating: a. that a vowel is close or tense, as é in French été. b. that a vowel or syllable has a high or rising pitch, as in Chinese or Ancient Greek. c. ]The Positive Rating Outlook reflects BRCH's improved operating performance in fiscal 2005, with the hospital posting an operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 2.9% (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. of $7.9 million). This was the first year the hospital has generated a positive operating margin since fiscal 1999. Given its plans to construct a replacement hospital, BRCH was required to accelerate depreciation costs of the current hospital facility. In fiscal 2005, BRCH had a negative impact of $1.6 million for the accelerated depreciation Accelerated Depreciation Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years of the life of an asset. Notes: The straight-line depreciation method spreads the cost evenly over the life of an asset. of the hospital. In addition, there was a favorable one-time adjustment of $6.5 million related to a reduction of an accrual for paid time off (PTO PTO abbr. 1. Parent Teacher Organization 2. or p.t.o. please turn over 3. power takeoff PTO or pto please turn over Noun 1. ). Excluding the impact of these two items, BRCH would have posted an operating gain of $2.9 million for fiscal 2005, which is in line with its budgeted goal for the year. Through the eight months ended Feb. 28, 2006, BRCH had an adjusted operating income of $2.4 million (excluding a $2.1 million impact from the accelerated depreciation), compared to a budgeted $2.9 million. BRCH has budgeted an operating margin of 2.9% (operating income of $8.8 million) for the full fiscal year of 2006, which excludes the $3.2 million negative impact related to accelerated depreciation for the year. Management expects to end the fiscal year slightly below budget with an operating margin of 2.6% due to the impact associated with Hurricane Wilma Hurricane Wilma was the most intense hurricane ever recorded in the Atlantic basin. Exceeding the 21 storms of the 1933 season, Wilma was the twenty-second storm (including the subtropical storm discovered in reanalysis), thirteenth hurricane, sixth major hurricane, and fourth in October 2005. E[acute accent]The current management team continues to position the organization to operate more effectively and efficiently, and has sold non-core assets and unprofitable service lines. BRCH's service line expansion into open-heart beginning September 2006 should improve volume growth. In addition, BRCH's cancer program should be further enhanced with a new cancer center that starts construction in the fall of 2006. The signing of a three-year contract with Blue Cross, effective Dec. 1, 2004, has also positively affected volume in fiscal 2005. Sustained operating profitability that is consistent with the rating category and further details related to BRCH's longer range plans to construct a replacement hospital may warrant an upgrade. E[acute accent]Primary strengths continue to be BRCH's strong balance sheet, very favorable service area characteristics, strong community support, and future service line expansions. BRCH's balance sheet remains very strong with unrestricted cash and investments of $228.8 million at Feb. 28, 2006. This has led to a very strong 349.8 days cash on hand, a cushion ratio of 21.9 times (x), and cash to debt of 189.1% at Feb. 28, 2006. BRCH's market area is viewed favorably, as the hospital is located in Florida's wealthiest county. In addition, BRCH enjoys strong community support, which was demonstrated by several large donor contributions to help fund the hospital's new open-heart program and cancer center expansion. E[acute accent]The main credit concerns remain BRCH's historical operating losses, competitive market, challenging payor mix, and weak security features in bond documents. In addition, the size and scope of BRCH's plans to construct a replacement hospital over the long term is a risk. Despite recent gains, BRCH has historically operated unprofitably. BRCH is also developing plans to build a replacement hospital on the campus of nearby Florida Atlantic University “FAU” redirects here. For other uses, see FAU (disambiguation). Florida Atlantic University, also referred to as FAU or Florida Atlantic, is a public, coeducational research university with its main campus in Boca Raton, Florida, United States. . The new hospital would not require a certificate of need and could be completed by 2011. Fitch has not factored the new facility and its associated costs into its analysis at this time. E[acute accent]Located in Boca Raton, FL, approximately 20 miles north of Fort Lauderdale, BRCH is a 400-licensed bed acute-care hospital. In fiscal 2005, BRCH reported total revenues of $268 million. BRCH covenants to provide annual audited financials and quarterly disclosure (includes balance sheet, income and cash flow statements, and utilization data) with the nationally recognized municipal securities information repositories. E[acute accent]The following outstanding debt ratings are affirmed by Fitch with a Stable Rating Outlook: E[acute accent]--$98,475,000 Palm Beach County Health Facilities Authority hospital revenue and refunding bonds, series 2001 (BRCH Corporation 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-'; E[acute accent]--$31,360,000 Palm Beach County Health Facilities Authority hospital revenue and refunding bonds, series 1999A (BRCH Corporation obligated group) 'A-'; E[acute accent](The $19,175,000 BRCH Corporation taxable variable-rate demand bonds, series 1999, are not rated.) E[acute accent]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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