Fitch Ratings has affirmed the 'BBB+' rating on the following --
The Rating Outlook is Stable.
The bonds are secured by a gross revenue pledge, lien on property of the obligated group, and a debt service reserve fund.
KEY RATING DRIVERS
WEAKENED PROFITABILITY METRICS: In fiscal 2013 (
FISCAL 2014 PERFORMANCE: Through the six-month interim period 2014, EHN recorded an approximately
SATISFACTORY LIQUIDITY: At
GROWTH STRATEGY: Management's strategy to grow inpatient and outpatient services in the northwest portion of EHN's service area is viewed favorably. Fitch expects this strategy to increase EHN's market share in a better payor mix environment, allowing the organization to continue serving its challenged downtown service area.
HIGH MEDICAID PATIENT LOAD: EHN has a very high
DECLINING INPATIENT ADMISSIONS: On a same-store basis (not including ECMC or the old
OPERATIONAL IMPROVEMENT EXPECTED: Supporting the 'BBB+' rating is the expectation that EHN will meet its budgeted goal for fiscal 2014 of an approximate
AFFIRMATION OF 'BBB+' RATING
The rating affirmation of 'BBB+' continues to be supported by EHN's leading market position in its historical service area and growth strategy in a better payor mix environment, manageable capital plans, and satisfactory liquidity position. EHN continues to have a leading market presence in the greater
Fitch believes EHN's capital plans are manageable. Management plans to spend approximately
KEY CREDIT CONCERNS
Fitch's main credit concerns include EHN's weak profitability, all-in debt service coverage metrics, and challenged service area characteristics highlighted by serving a large
EHN's consolidated profitability metrics have historically been weak, averaging near breakeven operating performance (negative 0.1 percent operating margin and 5.4 percent operating EBITDA margin) over the past four fiscal years. In addition, EHN is highly dependent on supplemental funding (
EHN provides annual and quarterly disclosure to the MSRB's EMMA system. Overall, Fitch views EHN's disclosure favorably, which consists of a balance sheet and statement of profitability and loss, cash flow statement, and utilization information.
Additional information is available at 'fitchratings.com'
--'Revenue-Supported Rating Criteria', dated
--'Nonprofit Hospitals and Health Systems Rating Criteria', dated
Revenue-Supported Rating Criteria
U.S. Nonprofit Hospitals and Health Systems Rating Criteria
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Fitch Ratings has affirmed the 'BBB+' rating on the following