Fitch Ratings has upgraded to 'AA-' from 'A+' the rating on the following --
The Rating Outlook is Stable.
Debt payments are secured by a pledge of the gross revenues of the VHC obligated group, which consists solely of
KEY RATING DRIVERS:
METRICS CONSISTENT WITH 'AA' MEDIANS: The upgrade to 'AA-' is based on VHC's profitability, coverage and liquidity metrics which are now consistent or better than Fitch's 'AA' medians, location in a demographically attractive market and modest capital needs.
EXCELLENT LIQUIDITY: Strong operating cash flow has enabled VHC to further strengthen its robust liquidity position. At year-end 2013, VHC reported unrestricted cash and investments of
STRONG PROFITABILITY MAINTAINED: VHC continues to produce strong operating results based on robust utilization, to a large part due to higher than originally anticipated volume of
MODEST CAPITAL NEEDS: VHC has a new patient tower erected in 2004 and faces no significant capital needs other than routine capital investments roughly equal to depreciation in the near- to medium- term. Debt load is manageable with maximum annual debt service (MADS) equal to 3 percent of revenues, and MADS coverage by EBITDA was a robust 6.9x for fiscal 2013.
COMPETITIVE SERVICE AREA: VHC's market share has steadily been increasing over the last decade and is now the highest in its service area at 34.2 percent, but the area remains competitive with Inova's two facilities in
MAINTAIN STRONG OPERATING PROFILE: While the budget for fiscal 2014 calls for a slightly lower operating EBITDA margin of 11.5 percent, Fitch expects VHC to maintain its robust liquidity metrics while sustaining coverage metrics consistent with the rating category. Fitch views VHC's strong liquidity position as a mitigant against the potential operating volatility associated with VHC's smaller revenue base relative to the rating category. Fitch views VHC's strong liquidity position as a mitigant against the potential operating volatility associated with VHC's smaller revenue base relative to the rating category.
Because of good cash flow and strong investment returns, VHC cash and unrestricted investments increased to
SOLID PROFITABILITY MAINTAINED
VHC reported operating income of
MODEST CAPITAL NEEDS
As VHC has a patient tower housing most patient care areas constructed in 2004, the organization has no major capital needs over the near- to medium-term. The capital budget for the current fiscal year is
COMPETITIVE SERVICE AREA
VHC operates in an affluent (
--'Revenue-Supported Rating Criteria', dated
--'Nonprofit Hospitals and Health Systems Rating Criteria', dated
Revenue-Supported Rating Criteria
Additional information is available at 'fitchratings.com'.
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Fitch Ratings has upgraded to 'AA-' from 'A+' the rating on the following