Bangkok--10 Jun--Standard & Poor's
Standard & Poor's Ratings Services has assigned its 'AA' long-term rating to Washington Health Care Facilities Authority's $103.275 million series 2011B revenue bonds issued on behalf of Providence Health & Services Obligated Group (PH&S), Wash. In addition, Standard & Poor's affirmed its 'AA' long-term rating and 'AA' underlying rating (SPUR) on PH&S's debt from various issuers as well as its 'AA/A-1+' on Clackamas County Hospital Facilities Authority, Ore.'s series 2003D-G bonds. Standard & Poor's also affirmed its 'A-1+' short-term rating on PH&S's existing commercial paper program.
The rating reflects Standard & Poor's view of PH&S's status as one of the nation's largest not-for-profit health care providers with solid geographic and financial dispersion, and a strong business position in all of its major markets. PH&S's strong, solid, and consistent operating profitability for many years and a capable management team also support Standard & Poor's rating. The rating fully incorporates the expected issuance this summer of the Alaska Industrial Development & Export Authority's $137.85 million series 2011A revenue bonds and the Oregon Facilities Authority's $50 million series 2011C bond issued on behalf of PH&S. Standard & Poor's believes a higher rating is precluded by a balance sheet that has improved but is still not consistent with a higher rating due to moderate leverage and liquidity, as well as large pension funding needs.
Credit factors supporting the 'AA' rating include PH&S's:
Record of strong and consistent operating performance and strong revenue growth;
Significant revenue and risk dispersion, with 27 acute-care hospitals and a variety of related institutions in Alaska, California, Montana, Oregon, and Washington, with a strong business position and performance in each of its markets and at its health plan, combined with solid utilization trends;
Interim results for the current year to date that point to another year that is consistent with existing trends; andSound management team that Standard & Poor's believes is forward looking, willing to make difficult decisions, and focused on quality issues as well.
The rating also reflects management's active efforts to reduce expenses in response to health care reform and anticipated reduction in net patient service revenue.
The stable outlook reflects Standard & Poor's assessment of PH&S's record of consistent operating performance, strong business position, and good operating cash flow. The stable outlook also reflects Standard & Poor's belief that any strategic growth should be consistent with management's intent to maintain a financial profile consistent with the 'AA' category. Standard & Poor's could consider a positive outlook or higher rating if PH&S demonstrates further balance sheet strengthening while maintaining operating performance; however, sharp declines in operating financial performance and balance sheet metrics, while not expected, could lead to a negative outlook or rating change.
RELATED CRITERIA AND RESEARCH
USPF Criteria: Not-For-Profit Health Care, June 14, 2007 USPF Criteria: Commercial Paper, VRDO, And Self-Liquidity, July 3, 2007 USPF Criteria: Municipal Swaps, June 27, 2007
Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
Media Contact:
Edward Sweeney, New York (1) 212-438-6634,
[email protected]
Analyst Contacts:
Martin D Arrick, New York (1) 212-438-7963
Geraldine Poon, San Francisco (1) 415-371-5078