Bangkok--28 Oct--Standard & Poor's
Standard & Poor's Ratings Services has assigned its 'AA' long-term rating to Alaska Industrial Development & Export Authority's $127.555 million series 2011A revenue bonds issued on behalf of Providence Health & Services Obligated Group (PH&S), Wash. In addition, Standard & Poor's assigned its 'AA' long-term rating to Oregon Facilities Authority's $24.805 million series 2011C revenue bonds also issued on behalf of PH&S. Standard & Poor's also affirmed its ratings on PH&S's debt from various issuers.
"The rating reflects our view of PH&S's status as one of the nation's largest not-for-profit health care providers with more than $8 billion in annual revenues demonstrating solid geographic and financial dispersion, and a strong business position in all of its major markets," said Standard & Poor's credit analyst Martin Arrick. "However, PH&S's financial profile is strong but only adequate when compared with other 'AA' systems because we consider liquidity only modest for the rating and operating profitability, while historically strong and consistent, has slipped in the current year," said Mr. Arrick.
The rating also reflects Standard & Poor's view of 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 historically sound operating performance, strong business position, and adequate balance sheet metrics. The stable outlook also reflects the ratings agency's belief that management is forward-looking and in the midst of a strong cost-containment program that over time could contribute to the improvement of PH&S's financial profile.
Success in improving its financial profile to levels more consistent with strong 'AA' category metrics, while making sure strategic growth is consistent with that strength, could lead to a higher rating although Standard & Poor's believes this is not likely within the two-year time horizon of the outlook given the increasingly difficult health care reimbursement environment. A negative outlook or downgrade could occur if the current softness in performance demonstrated in the 2011 interim results worsens or persists for an extended period without improved balance sheet metrics. In addition, any large strategic growth initiatives that were dilutive, without improved operations or balance sheet improvements elsewhere, are likely to be viewed negatively as PH&S's balance sheet is already weak for this rating level.
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
- General Criteria: Methodology: The Interaction Of Bond Insurance And Credit Ratings, Aug. 24, 2009
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:
Ola Fadahunsi, New York (1) 212-438-5095,
[email protected]
Analyst Contacts:
Martin D Arrick, New York (1) 212-438-7963
Geraldine Poon, San Francisco (1) 415-371-5078