Bangkok--3 Sep--Standard & Poor's
Standard & Poor's Ratings Services has raised its rating to 'A' from 'A-' on the Colorado Health Facilities Authority's series 2005D and 2005F revenue bonds, issued on behalf of Poudre Valley Health System (PVHS). Standard & Poor's also raised its underlying rating (SPUR) to 'A' from 'A-' on the authority's series 2005A-2005C bonds, issued for PVHS. The outlook is stable.
Factors supporting the 'A' ratings include our view of PVHS':
Very strong operating results for the six months ended June 30, 2010 and for fiscal 2009 (year ended Dec. 31) with operating margins of 10.9% and 8.9%, respectively;
Continued profitability and maturation of Medical Center of the Rockies, the system's new hospital that opened in 2007;
Excellent liquidity with 270 days' cash on hand at June 30, 2010, up from 206 days at the time of our last review;
Strong coverage of maximum annual debt service (MADS) of 5.0x for the interim period and 4.2x for fiscal 2009, despite a moderately high debt burden of over 4%;
Solid and growing business position in northern Colorado; and
Sound and stable management team that is forward-looking.
While certain of PVHS' attributes are consistent with a higher rating, we believe that the preceding credit strengths are partially tempered by the organization's moderately high debt load and only adequate leverage compared to comparably rated hospitals, though we do expect this to continue to improve with further profitability and through the normal amortization of PVHS' debt.
"Since our last review in May 2009, when we raised PVHS' ratings to 'A-', the organization has continued to build its financial profile, posting excellent financial results and generating robust cash flow, which has, in turn, allowed for marked improvements to an already sound balance sheet," noted credit analyst Ken Gacka.
RELATED CRITERIA AND RESEARCH
USPF Criteria: Not-For-Profit Health Care, June 14, 2007
Complete ratings information is available to RatingsDirect subscribers on the Global Credit Portal at www.globalcreditportal.com and 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. Use the Ratings search box located in the left column.
Media Contact:
Ana Sandoval, New York (1) 212-438-5095,
[email protected]
Analyst Contacts:
Kenneth T Gacka, San Francisco (1) 415-371-5036
Martin D Arrick, New York (1) 212-438-7963