Bangkok--23 Jun--Standard & Poor's
Standard & Poor's Ratings Services revised the outlook to positive from stable and affirmed its 'A-' long-term rating and underlying rating (SPUR) on St. Tammany Parish Hospital Service District No. 1, La.'s series 1998 hospital revenue bonds, issued for St. Tammany Parish Hospital (STPH).
"STPH has improved its operating margins, strengthened its debt service coverage, and maintained a relatively low debt level, in our view," said Standard & Poor's credit analyst Robert Dobbins. "However, we believe softening neonatal intensive-care unit and critical-care volumes and limited growth potential for liquidity preclude a rating upgrade at this time."
The outlook revision reflects our view of STPH's:
- Improved operating margin of 4.6% for the year ended Dec. 31, 2010, up from 3.5% for the year ended Dec. 31, 2009;
- Strong maximum annual debt service coverage equal to 3.9x, and a low 2.75% debt burden;
- Modest leverage characterized by 25% long-term debt to capitalization; and
- Favorable demographic trends, with projected 10% to 12% growth in regional population and below-average unemployment. Partially offsetting the preceding credit strengths is our view of:
Flat total inpatient volumes, including declines of 36% and 11% in neonatal intensive-care unit and critical care, respectively, for the period ended April 30, 2011, and
Limited growth potential for liquidity as the hospital plans to finance capital expenditures with cash flows.
As of fiscal year-end Dec. 31, 2010, STPH had $52.8 million of long-term debt outstanding, including the series 1998 bonds and bank notes payable used for the purchase of real estate and of IT software.
RELATED CRITERIA AND RESEARCH
USPF Criteria: Not-For-Profit Health Care, June 14, 2007
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Media Contact:
Edward Sweeney, New York (1) 212-438-6634,
[email protected]
Analyst Contacts:
Robert Dobbins, San Francisco (1) 415-371-5054
Karl Propst, Dallas (1) 214-871-1427