Bangkok--3 Aug--Standard & Poor's
Standard & Poor's Ratings Services raised its rating to 'BBB' from 'BBB-' on the Colorado Health Facilities Authority's $41.7 million series 2007A revenue bonds, issued for Yampa Valley Medical Center (YVMC). The outlook is stable.
"The upgrade reflects YVMC's steady improvement in key balance sheet measures and consistently strong operating and excess margins," said Standard & Poor's credit analyst Kenneth Gacka.
The 'BBB' rating is supported by our view of YVMC's:
Strong and improving liquidity as evidenced by 234 days' cash on hand for the fiscal year ended Sept. 30, 2008, up from 226 and 190 days for fiscal years 2007 and 2006, respectively. The positive trend has continued through June 30, 2009, with days increasing to 249;
Solid operating and excess margins of 4.6% and 8.2%, respectively for the fiscal year ended Sept. 30, 2008, and continued performance strength through June 30, 2009;
Conservative investment portfolio made up of nearly all fixed-income investments. This has allowed for improved liquidity and sustained excess margins, despite recent market declines.
A low average age of plant of 6.7 as of the fiscal 2008 audit; and
A solid business position, reflected by an 89% market share in the primary service area of Routt County.
Offsetting credit factors include:
YVMC's location in a small, but growing, resort community, with a primary service area population of just over 22,000;
A dependence upon a small number of physicians for the majority of patient revenues; and
A limited breadth of services with a heavy concentration on orthopedics, which accounts for about 32% of gross charges, although management is making efforts to diversify services, particularly in cardiology.
YVMC's debt is secured by a pledge of gross revenues under a loan agreement and trust indenture. The hospital has no interest-rate swaps and has no additional debt plans at this time.
YVMC is located in Steamboat Springs, a small resort community about 160 miles northwest of Denver. It is the sole community health care provider in its primary service area, Routt County, which has a small but growing population of just over 22,000.
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:
Kenneth T Gacka, San Francisco (1) 415-371-5036
Geraldine Poon, San Francisco (1) 415-371-5078