Bangkok--6 May--Standard & Poor's
Standard & Poor's Ratings Services revised its outlook on John C. Lincoln Health Network, Ariz.'s (Lincoln) outstanding revenue bonds (various series and issuers) to stable from positive. At the same time, Standard & Poor's affirmed its 'BBB' long-term rating and underlying rating (SPUR) on the same outstanding revenue bonds.
Factors contributing to the outlook revision to stable include a considerable decline in operating performance in fiscal 2008, a constrained balance sheet with some softening of liquidity metrics; and the continued competitive market and longer term capital infrastructure needs.
The rating reflects the following credit strengths Lincoln's solid market presence in the north Phoenix service area, a history of sound financial performance generating robust cash flow and improved performance year to date and a low average age of plant of just 6.6 years.
"Given the economic slump, recent softening in volumes, and below-budgeted operating margin, there is little upward rating potential," said Standard & Poor's credit analyst Geraldine Poon. "Additional capital expenditures will necessarily be factored into the rating as management solidifies any future financing or significant capital plans."
Lincoln owns and operates a 266-bed acute-care facility (North Mountain) in north-central Phoenix and a 174-bed acute-care facility (Deer Valley) that is 10 miles northwest of the North Mountain campus. Lincoln has benefited from the rapid population growth. Lincoln is well positioned in the north Phoenix area, with the North Mountain and Deer Valley facilities accounting for a steady combined market share of 29%, based on Lincoln's zip-code-defined primary service area. The for-profit Abrazo Health System and Banner Health System capture 23% and 21% market shares, respectively.
RELATED RESEARCH
USPF Criteria: "Not-For-Profit Health Care," June 14, 2007
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Media Contact:
Ana Sandoval, New York (1) 212-438-5095, [email protected]
Analyst Contacts:
Geraldine Poon, San Francisco (1) 415-371-5078
Kevin Holloran, Dallas (1) 214-871-1412