Fitch Tracks DMC's Five-Month YTD Performance.Business Editors NEW YORK--(BUSINESS WIRE)--Aug. 3, 2000 The Detroit Medical Center The Detroit Medical Center is a Detroit-based non-profit corporation that owns and operates nine general and specialty hospitals in southeast Michigan. Detroit Medical Center hospitals include: DMC Detroit Medical Center DMC Darryl McDaniels (rapper) DMC Destination Management Company DMC Del Mar College (Corpus Christi, TX) ), whose approximately $577 million outstanding revenue bonds are rated `BB+' by Fitch, posted a five-month (5/31/2000) bottom-line loss of $29.2 million, $1.3 million ahead of its year-to-date budgeted loss of $30.5 million. DMC budgeted a year-end loss of $8.7 million, which means that DMC expects to operate significantly more profitably over the following seven months. DMC lost $98.4 million in 1999 and $106.1 million in 1998. Through five months of 1999, DMC lost $55.1 million. While DMC continues to demonstrate balance sheet indicators that are within Fitch's 1999 medians as of May 31, 2000, specifically liquidity levels, DMC's cash flow and debt service coverage indicators continue to be markedly below Fitch's 1999 `BBB' medians. DMC's five-month bottom-line margin of negative 4.3% compares unfavorably with Fitch's 1999 `BBB' median of 1.6%, as does DMC's earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses at negative $73 million, DMC must generate significant income from non-operating activities to achieve its MADS of $43.5 million. DMC's cash flow from operations has been negatively impacted by $39 million in deferred revenue related to advance Medicaid payments of approximately $90 million that were received by DMC late in 1999. In addition, DMC's volume has shown signs of erosion, as its adult discharges through five months are 8.5% less than the same five- month period in 1999 and 4% off its year-to-date budget. Fitch will continue to monitor DMC's volume indicators closely. Fitch believes that management's strategic efforts, including: its consolidation program in its northwest region
The Northwest Region ; its negotiations with third-party payors and its contractual relationship with the faculty practice physicians of Wayne State University Wayne State University, at Detroit, Mich.; state supported; coeducational; established 1956 as a successor to Wayne Univ. (formed 1934 by a merger of five city colleges). ; and its plans of retaining quality physicians, reducing expenses, and developing a stronger image with the communities it serves, should lead to considerably improved profitability in the years ahead. Nonetheless, Fitch still believes that DMC's year-end budget expectations are aggressive. DMC operates seven hospitals, six of which serve the metropolitan Detroit area. DMC is the largest health care provider in the Detroit market, with more than 12,695 full-time equivalent Full-time equivalent (FTE) is a way to measure a worker's involvement in a project, or a student's enrollment at an educational institution. An FTE of 1.0 means that the person is equivalent to a full-time worker, while an FTE of 0.5 signals that the worker is only half-time. employees and $1.6 billion in total annual revenues. Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual headquartered in 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 and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide. The agency, which is a combination of Fitch IBCA IBCA International Braille Chess Association IBCA Institute of Burial and Cremation Administration IBCA Integrated Business Communications Alliance IBCA International Barbeque Cookers Association IBCA Department of Interior Board of Contract Appeals and Duff & Phelps Credit Rating Co., provides ratings for Financial Institutions, Insurance, Corporates, Structured Finance, Sovereigns and Public Finance Markets worldwide. Affected issues: -- $108,650,000 Michigan State Hospital Finance Authority revenue and refunding bonds (Detroit Medical Center 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), series 1998A. -- $174,460,000 Michigan State Hospital Finance Authority revenue and refunding bonds (Detroit Medical Center Obligated Group), series 1997A. These bonds are rated `AAA' based on the financial strength rating of Ambac Assurance Co. -- $43,745,000 Michigan State Hospital Finance Authority revenue and refunding bonds (Sinai Hospital of Greater Detroit), series 1995. -- $132,285,000 Michigan State Hospital Finance Authority revenue and refunding bonds (Detroit Medical Center Obligated Group), series 1993B. -- $110,245,000 Michigan State Hospital Finance Authority revenue and refunding bonds (Detroit Medical Center Obligated Group), series 1993A. -- $4,410,000 Michigan State Hospital Finance Authority revenue and refunding bonds (Detroit Medical Center Obligated Group), series 1991A. -- $2,575,000 Michigan State Hospital Finance Authority revenue and refunding bonds (Detroit Medical Center Obligated Group), series 1988A and 1988B. |
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