S&P Afms NYS Med Care Fac Fin Agy BB Revs;Outlk Stab.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 9/3/98 - Standard & Poor's today affirmed af·firm
v. af·firmed, af·firm·ing, af·firms
1. To declare positively or firmly; maintain to be true.
2. To support or uphold the validity of; confirm.
v.intr. its double-'B' rating on 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 State Medical Care Facilities Finance Agency's health care revenue bonds series 1993A, issued for Central Suffolk Hospital, and revised the outlook to stable from negative.
The outlook revision reflects: -- Anticipated benefits from the recent merger with two other eastern Long Island hospitals, including enhanced managed-care contracting leverage and the centralization cen·tral·ize
v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es
1. To draw into or toward a center; consolidate.
2. of certain ancillary Subordinate; aiding. A legal proceeding that is not the primary dispute but which aids the judgment rendered in or the outcome of the main action. A descriptive term that denotes a legal claim, the existence of which is dependent upon or reasonably linked to a main claim. and administrative functions;
-- Improved financial performance since poor 1995 results caused a covenant violation when debt service coverage fell below 1 times (x); and
-- The expectation of improved coverage and free cash flow pending a drop in debt service from the current level of $2.2 million to $1.75 million in 1999.
Continuing credit risks reflected in the rating include: -- Weak excess margins of 1.22% in 1996 and 0.77% in 1997, resulting in thin, but adequate debt service coverage of 2.03x in 1996 and 1.76x in 1997;
-- Very high leverage, with debt to capital at 85% due to a low fund balance of only $3.4 million, although the debt burden is more moderate at 4% of revenues; and
-- Light liquidity, as cash and board-designated funds totaled $5.1 million at Dec. 31, 1997, equal to 35 days' expenses and 26% of debt.
In 1997, Peconic Bay The Peconic Bay is the parent name for two bays between the North Fork and the South Fork of Long Island in the U.S. state of New York. It is divided by Robins Island into the Great Peconic Bay on the west and Little Peconic Bay. Health System was created as the parent corporation for three hospitals -- Central Suffolk, Southampton Hospital Southampton Hospital, a 168-bed hospital, in Southampton, New York, is the only hospital in the Hamptons.
First Lady of the United States Jacqueline Kennedy Onassis and her sister Lee Radziwill were born there. , and Eastern Long Island Hospital. Each hospital appoints board members to the parent but retains its own assets. Benefits from the merger are just beginning to become manifest, particularly as managed-care contracts are renegotiated as a system. Managed care is a rapidly growing part of the payor mix, accounting for one-third of business. Medicare accounts for 45% of revenues, while Medicaid is modest at 5%. Central Suffolk should benefit from length-of-stay reductions engineered in the last year. The overall length of stay in June 1998 was 5.18 days, compared with 7.19 in June 1997.
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. has been crimped crimped
said of grain that has been passed through corrugated rollers after previous exposure to moist heat so that the grain is fractured but there is a minimum of dust. by low cash flow, averaging just $1.2 million in the last three years, well below the annual $2.3 million depreciation expense. As a result, age of plant for fiscal year-end Fiscal Year-End
The completion of a one-year, or 12-month, accounting period.
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. 1997 was high at 13.87 years. Routine capital spending should be restored as debt service expense decreases starting in 1999. However, management reports no major capital needs. Admissions were flat in 1997 at 4,514, but rose 3.2% for the first half of 1998.
OUTLOOK: STABLE The outlook anticipates that merger benefits will help to at
least maintain the current financial position until the debt service begins to fall, after which cash flow is expected to improve, Standard & Poor's said. CreditWire
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