Fitch Ratings has affirmed the 'BBB-' rating on the following bonds issued by --
The Rating Outlook is revised to Positive from Stable.
Debt payments are secured by a general obligation of the Corp. Bonds are not secured by a mortgage on or security interest in any revenues, property or assets of the hospital. The corporation is the sole member of the obligated group and the hospital and the foundation are named as designated affiliates under the master trust indenture. Fitch views this security as weak at the current rating level.
KEY RATING DRIVERS:
IMPROVING FINANCIAL PROFILE: BRRH current financial profile is characterized by improved operations, growing liquidity, and a manageable debt burden. In fiscal 2013 (
STRONG PHYSICIAN RECRUITMENT: BRRH has had a net gain of 27 physicians since 2012, including physicians in key service lines such as orthopedics, neurology, urology, and cardiology. The strong recruitment has helped grow volumes, with most volume figures increasing year over year through the first quarter of fiscal 2014, including inpatient volumes, which were up 5.3 percent.
PHILANTHROPIC SUPPORT A CREDIT STRENGTH: BRRH continues to receive excellent community support. In fiscal 2013, BRRH received approximately 6,500 donations totaling
LARGE SENIOR PATIENT BASE: BRRH has seasonal volume swings due to a mostly senior patient base that winters in
SUSTAINING OPERATING PERFORMANCE: Sustaining the current levels of operating performance is a key for BRRH. Should BRRH end fiscal 2014 with another year of positive operations, an upgrade would be likely.
BRRH is an acute care hospital located in
IMPROVING FINANCIAL PROFILE
The Positive Outlook reflects the improved financial profile of BRRH. In fiscal 2013, BRRH posted a positive operation margin for the first time since 2006 and maximum annual debt service (MADS; including capital leases) was 3.4 time (x), above Fitch's 'BBB' category median of 3.1x.
Operationally, BRRH continues to distance itself from fiscal 2008, when it posted a
Since then, BRRH has improved profitability and refocused its strategic priorities. BRRH has undertaken a number of strategic initiatives, both for growth and efficiency, including investing in information technology, pursuing an outpatient strategy, strengthening certain clinical services and physician recruitment. Interim first quarter 2014 results show most major utilization figures up, including inpatient admissions, outpatient surgeries, and emergency department visits.
Through the 1Q of fiscal 2014, BRRH posted a negative 2.9 percent operating margin which improved from the prior year's negative 2.2 percent operating margin) when
BRRH has also made progress in rebuilding its balance sheet. Unrestricted cash and investments at
STRATEGY AND NEW PARTNERSHIPS
Fitch views BRRH's strategic initiatives positively. To build its outpatient presence, BRRH has placed ambulatory care centers around its service area. BRRH seeks locations where it believes it can gain market share, as well as access a patient base that lives in the area year round and is privately insured. BRRH management attributes a portion of the recent growth in volume to gains it has made in the western part of its service area, where it has an ambulatory care center. BRRH is set to open a new care center in
Fitch views two recently announced partnerships positively. In June of 2013, BRRH signed an agreement to partner with the
In January of 2014, BRRH signed a three year agreement with
CAPITAL PLANS AND PHILANTHROPY
The Positive Outlook also incorporates BRRH's strong and consistent philanthropic support which remained strong even through its operating troubles in 2008. Over the last three years, BRRH's has received between
Recent capital expenditures supported by philanthropy include the purchase of two DaVinci robots and the building of a state-of the- art hybrid operating room. Currently, BRRH is nearing completion of a neuroscience center, expected to open in April of 2014, which is being funded by philanthropy, including a lead gift of
Once the neuroscience building is completed, BRRH will build a new outpatient women's center, for which it already has a
MANAGEABLE DEBT BURDEN
Due to the strong philanthropic support used for major capital projects, BRRH has been able to maintain a relatively modest leverage position. BRRH ended fiscal 2013 with most of its debt ratios in line with 'BBB' category medians. Even at the end of the first quarter, its weakest of the year, BRRH's debt to EBITDA was 4.3x, relative to a median of 3.8x and its debt service coverage of MADS (including capital leases) was adequate at 2x.
BRRH covenants to provide annual audited financials and quarterly disclosure, which includes management discussion and analysis, utilization statistics, an income statement, a balance sheet, and cash flow statement.
Additional information is available at 'fitchratings.com'.
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Fitch Ratings has affirmed the 'BBB-' rating on the following bonds issued by