Fitch Ratings has upgraded the rating to 'A+' from 'A' on the following bonds issued by the --
The Rating Outlook is Stable.
Bond payments are secured by a pledge of the gross revenues of the obligated group and a mortgage on certain property of the obligated group.
KEY RATING DRIVERS
CONSISTENTLY STRONG PROFITABILITY: Operating profitability has been consistently strong, exceeding Fitch's 'A' category medians with operating EBITDA margin averaging 12.4 percent since fiscal 2008 and improving to 13.6 percent in fiscal 2013.
ROBUST DEBT SERVICE COVERAGE: Rush's moderate debt burden and increased profitability resulted in robust coverage of maximum annual debt service (MADS) by operating EBITDA of 4.4x in fiscal 2013 easily exceeding Fitch's 'A' category median of 3.4x.
SHARPLY IMPROVED LIQUIDITY: Unrestricted cash and investments increased
CAPITAL PROJECT SUBSTANTIALLY COMPLETE: Rush's
SUSTAINED OPERATING PROFITABILITY: The rating upgrade to 'A+' reflects Fitch's expectation that Rush will sustain historical profitability levels thereby maintaining coverage metrics at levels consistent with the rating and allowing for further growth in unrestricted liquidity given Rush's decreased capital spending levels going forward.
Rush operates an academic medical center and two community hospitals located in
Despite operating in the highly competitive
CONSISTENTLY STRONG PROFITABILITY
Operating profitability has consistently exceeded Fitch's 'A' category medians. Operating and operating EBITDA margins averaged 4.9 percent and 12.3 percent since fiscal 2008 relative to Fitch's 'A' category medians of 3.3 percent and 10.7 percent, respectively. Operating margin compressed to 4.2 percent in fiscal 2013 due to increased depreciation and interest expenses associated with the opening of Rush's new patient tower in
ROBUST DEBT SERVICE COVERAGE
Rush's moderate debt burden and strong profitability have resulted in robust debt service coverage. The system's debt burden has moderated with MADS as a percent of revenue decreasing from 3.7 percent in fiscal 2009 to 3.1 percent in fiscal 2013 relative to Fitch's 'A' category median of 3.1 percent. MADS coverage by EBITDA improved to 4.9x in fiscal 2013 and 5.3x in the interim period while MADS coverage by operating EBITDA increased to 4.4x in fiscal 2013 and 4.3x in the interim period. Both metrics easily exceed Fitch's 'A' category medians of 3.8x and 3.4x, respectively.
SHARPLY IMPROVED LIQUIDITY
Unrestricted cash and investments increased 44.4 percent since
CAPITAL PROJECT SUBSTANTIALLY COMPLETE
Rush embarked on a
Rush covenants to disclose audited financial statements within 6 months of the end of the fiscal year and quarterly reports no later than 60 days after the end of each fiscal quarter. Rush's disclosure practices are among the best in Fitch's health care portfolio with quarterly and annual disclosure consisting of balance sheet, income statements and cash flow statements, utilization statistics and a management discussion and analysis.
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Fitch Ratings has upgraded the rating to 'A+' from 'A' on the following bonds issued by the