Bangkok--15 Oct--Standard & Poor's
Standard & Poor's Ratings Services assigned its 'AA+' long-term rating to Riverton, Utah's $250 million hospital revenue bonds series 2009, issued for IHC Health Services Inc., the obligated group of Intermountain Health Care (Intermountain).
We also affirmed our 'AA+' unenhanced ratings, 'AA+' underlying ratings (SPUR), and 'AA+/A-1+' dual ratings on various issuers' revenue bonds, issued for Intermountain, which is the state's largest integrated delivery system. The outlook is stable.
"The 'AA+' ratings reflect Intermountain's strong business position in the economically robust state of Utah, consistently strong financial performance, considerable financial flexibility especially in its rates, and a balance sheet that is sound but not stellar for the rating," said Standard & Poor's credit analyst Liz Sweeney. Intermountain has performed extraordinarily well on operations this year, offsetting soft investment performance and a sizable negative pension adjustment in the 2008 audit, which will be partly reversed in 2009. Despite recent pension design changes, pension funding needs will remain elevated for the next few years compared with funding expectations in the recent past.
Intermountain's key challenges include liquidity that is modest for the rating level and management of its sizable capital program. We believe that Intermountain's excellent operating results offset the relatively light liquidity and provide capacity to manage the capital plans, which average $375 million annually in the five-year range 2009-2013. Although we don't expect the very strong operating results year to date to continue for the long-term, if margins revert to historic levels, Intermountain should still have sufficient cash flow to service its debt, fund capital needs, and add modestly to the liquidity level over the next few years.
RELATED RESEARCH
USPF Criteria: "Not-For-Profit Health Care," June 14, 2007
USPF Criteria: "Bank Liquidity Facilities," June 22, 2007
USPF Criteria: "Standby Bond Purchase Agreement Automatic Termination Events," April 11, 2008
USPF Criteria: "Debt Derivative Profile Scores," March 27, 2006
Complete ratings information is available to RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; select your preferred country or region, then Ratings in the left navigation bar, followed by Find a Rating.
Media Contact:
Ana Sandoval, New York (1) 212-438-5095, [email protected]
Analyst Contacts:
Liz Sweeney, New York (1) 212-438-2102
Martin D Arrick, New York (1) 212-438-7963