Fitch Upgrades Underlying Rating on Baptist Homes of Indiana Bonds to 'A-' from 'BBB+'.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. upgrades its underlying rating on the approximately $27.7 million Indiana Health Facilities Financing Authority variable-rate demand bonds (Baptist Homes of Indiana Project) series 2000 to 'A-' from 'BBB+'. The Rating Outlook is Stable. The rating upgrade is based on Baptist Homes of Indiana's (BHI BHI Baker Hughes Incorporated BHI Brain Heart Infusion (agar) BHI Better Hearing Institute BHI British Horological Institute (UK) BHI Boots Healthcare International BHI Branch If Higher ) continued solid financial profile and strong occupancy levels. BHI has excellent liquidity, improved profitability, and solid debt service coverage ratios with the majority of its indicators in excess of Fitch's 'A' category medians. Days cash on hand was 544 days at March 31, 2005 from 192 days at fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. 2000. Liquidity growth has been due to solid entrance-fee receipts and improved profitability ratios Profitability ratios Ratios that focus on how well a firm is performing. Profit margins measure performance with relation to sales. Rate of return ratios measure performance relative to some measure of size of the investment. . Excess margins were in the double digits Double Digits was a pricing game on the American television game show, The Price Is Right. Played from April 20, 1973 through May 18, 1973's show, it was played for a car and used small prizes. the last two fiscal years and 19.7% through the first quarter 2005. Excess margins are budgeted to be at least 8% each year. Improved profitability measures have been due to better investment returns and management's practice of implementing rate increases to cover increased expenses. Debt service coverage was very strong in 2004 with 5.1 times (x) coverage; however, this was bolstered by the addition of 20 units at Hoosier Village that contributed to $3.4 million of initial entrance fee receipts. Without entrance fee receipts, debt service coverage is still solid and averaged 2.0x the last two years and 2.8x in the first quarter of 2005. Contributing to this overall strong financial profile are BHI's historical average occupancy rates, which remain above 90% in its independent and nursing units at its three facilities. Occupancy rates are supported by BHI's solid reputation, which is demonstrated by the number of resident referrals that account for approximately two-thirds of all unit sales unit sales Sales measured in terms of physical units rather than dollars. Unit sales data are often used by financial analysts when evaluating the health of a company. . Main credit concerns for BHI are future capital plans and competitive markets. BHI has retained Retirement Living Services (RLS Restless legs syndrome (RLS) A disorder in which the patient experiences crawling, aching, or other disagreeable sensations in the calves that can be relieved by movement. RLS is a frequent cause of difficulty falling asleep at night. ) to complete a comprehensive development plan to determine the feasibility of a new retirement community in its market areas. In addition, BHI will construct 20-36 independent living units at its Hoosier Village campus and 20 units at its Towne House campus in 2005-2006, which will mainly be financed from the new unit entrance fee receipts. Fitch views BHI's markets as competitive, particularly in Indianapolis, which has caused pressure on labor recruitment and retention at its Hoosier Village campus. Other providers in BHI's market areas may also be developing additional campuses, further demonstrating the competitive market. Fitch expects the solid financial performance to continue and management has demonstrated a sound track record even in periods of new unit construction. Due to the uncertainty surrounding BHI's future capital plans, Fitch will evaluate the impact of the new projects on BHI's credit after the cost and financing plans have been finalized. The series 2000 bonds are backed by an irrevocable direct pay letter of credit (LOC LOC - lines of code ) from LaSalle Bank LaSalle Bank Corporation is the holding company for LaSalle Bank N.A. and LaSalle Bank Midwest N.A. With $116 billion in assets, it is headquartered at 135 South LaSalle Street in Chicago, Illinois. . The LOC agreement expires as of Jan. 1, 2006 and BHI is in the process of renegotiating an extension. Following the series 2000 bond issue, BHI entered into a five-year interest rate agreement with a cap of 7% and a floor of 3.5% with Lehman Brothers as the counterparty. Management also anticipates entering into a new cap and collar agreement. Baptist Homes of Indiana is a Type B provider with three campuses in Indiana: Hoosier Village in Indianapolis, with 167 independent/residential units and 80 health center beds; Towne House in Fort Wayne, with 160 independent/residential units and 92 health center beds; and Four Seasons in Columbus, with 115 independent/residential units and 76 health center beds. BHI had total operating revenues of $30.7 million in fiscal 2004. BHI covenants to provide annual and quarterly disclosure to bondholders and Fitch; however, disclosure to bondholders is upon request. Disclosure to Fitch is very good and includes timely receipt of a balance sheet, income statement, statement of cash flows, utilization statistics, and management discussion and analysis. Fitch's rating definitions are available on the agency's public web site, www.fitchratings.com. Published ratings, criteria and methodologies, and 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 this site, at all times. This document will remain on the public site for seven days. |
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