2008-06-11 23:56:33 -
- Fitch Ratings has assigned an 'A+' rating to North Brevard County Hospital District's approximately $109 million refunding revenue bonds, issued on behalf of Parrish Medical Center (PMC). In addition, Fitch has affirmed PMC's outstanding debt at 'A+'. The Rating Outlook is Stable.
Bond proceeds will be used to refinance PMC's series 2000 and series 2005 auction-rate securities, fund
the construction of a new cardiac catheterization laboratory and 'Heart & Health' Village, fund a debt service reserve fund, and pay costs of issuance. As part of the refinancing, the series 2000 Ambac-insurance and series 2005 CIFG-insurance will be terminated and not replaced. Furthermore, PMC will terminate its swaps related to the series 2000 bonds in which PMC will be paid approximately $500,000. The series 2008 bonds will be issued as fixed-rate uninsured debt scheduled to mature by 2043.
The 'A+' rating is supported by PMC's strong balance sheet, leading market position, unused taxing authority power, and positive trend in inpatient admissions. As of September 30, 2007, PMC had a pro-forma unrestricted cash and investments position of approximately $119 million, which translated into 364 days cash on hand, a pro-forma cushion ratio of 17.5 times (x), and a pro-forma cash to debt ratio of 108%. Through the unaudited interim period ending April 30, 2008, PMC's unrestricted cash position declined slightly to a total of $98 million from $101 million in fiscal 2007. The minor dip in cash is attributed to the funding of PMC's 'Heart & Health' Village and the construction of the catheterization lab. Approximately $18 million will be reimbursed to PMC's cash flow from the series 2008 bond issue.
PMC has the leading market position in its service area and is designated as the sole community provider. PMC maintains a 61% market share, which has increased by 5% since 2005. This trend reflects increasing inpatient admissions coupled with the ability to recapture out-migration specialty services at PMC's new Port St. John outpatient facility. As a district hospital, PMC has the authority to levy up to five mills on district residential property to support hospital operations. Based on district taxable property values in fiscal 2007, the maximum levy would generate approximately $17.8 million in additional revenue. The tax has not been levied since 1994.
Credit concerns include PMC's moderately high debt burden, out-migration of specialty services, and difficult payor mix related to challenging socioeconomic indicators. PMC's pro-forma debt burden as illustrated by MADS as a percentage of revenue of 4.8% and debt to capitalization measuring 42.4% in 2007 compare adversely to Fitch's 2007 'A' medians of 3.1% and 38.9%, respectively. PMC has begun to address the out-migration of inpatient specialty services. However, the concern remains as indicated by the drop in outpatient surgeries to 8,745 in 2007 from 10,948 in 2006. In addition, PMC's payor mix remains a challenge as witnessed by a rising uninsured and underinsured population in the service area.
The Stable Outlook reflects Fitch's belief that PMC will maintain its solid liquidity position and operating indicators will continue to be positive and remain consistent with historical figures.
PMC is a district hospital with 210 licensed beds (160 staffed beds) located in Titusville, Florida (45 miles east of Orlando, Fl). In 2007, PMC had total revenues of $142.3 million. Fitch considers PMC's periodic disclosure of financial statements and utilization data to be excellent.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Fitch Ratings
Michael Burger, + 1-212-908-0555 (New York)
Jim Mitchell, +1-813-222-1395 (Tampa)
Media Relations:
Christopher Kimble, +1-212-908-0226 (New York)
