NEW YORK--(BUSINESS WIRE)--
Fitch Ratings affirms the 'AA-' rating on the following hospital revenue
bonds issued by the Connecticut Health and Educational Facilities
Authority on behalf of Greenwich Hospital (the hospital):
--$40.2 million series 2008.
The Rating Outlook is Stable.
The bonds are secured by a pledge of the gross receipts of the obligated
KEY RATING DRIVERS
LOW DEBT BURDEN: The hospital has a very modest debt burden with maximum
annual debt service (MADS) equating to 1.2% of revenue in fiscal 2013.
Robust fundraising efforts as well as the hospital's operations fund the
hospital's capital needs, which reduce the need to issue additional
debt. Cash equal to 353.4% of long-term debt at fiscal year-end (FYE)
2013 mitigates the risk associated with the hospital's 100%
variable-rate debt profile. MADS coverage by EBITDA remains excellent at
9.7x through the eight-month interim period ended May 31, 2014 (the
CONSISTENT PROFITABILITY: Greenwich Hospital has a consistent record of
operating profitability despite market-wide volume deterioration. The
hospital is able to maintain strong margins by effectively managing
costs and continuing to implement operating efficiencies. Through the
interim period the hospital achieved a strong operating EBITDA margin of
11.2%, which is in line with the 11.3% in fiscal 2013.
EVOLVING COMPETITIVE LANDSCAPE: New York has seen a considerable amount
of activity involving hospital affiliations and strategic relationships
with major New York hospital providers. The more consolidated
competitive environment has not had a measurable negative impact on
Greenwich Hospital's market share, but the potential remains.
MEMBER OF YALE-NEW HAVEN: The hospital continues to benefit from its
relationship with Yale-New Haven Health System (YNHHS; rated 'AA-' by
Fitch), which provides Greenwich Hospital with supply savings, certain
management services and clinical support in several subspecialties.
MAINTENANCE OF CREDIT PROFILE: Fitch expects that Greenwich's operating
performance will be stable due to its consistent operating performance,
low debt load, and the benefits of being part of YNHHS.
Greenwich Hospital consists of an acute-care hospital (206 beds)
operating in Greenwich, CT. The hospital provides medical, surgical,
dental and other health care services in its primary service area of
Fairfield County, CT and Westchester County, NY.
Fitch's analysis is based on the consolidated entity, Greenwich Hospital
Health Care Services, Inc. and subsidiaries, which had total revenue of
approximately $343 million in fiscal year 2013.
LOW DEBT BURDEN
At FYE 2013 Greenwich Hospital had MADS coverage by EBITDA of 9.8x, MADS
at a very moderate 1.2% of revenues, and a cushion ratio of 31.7x, all
well ahead of Fitch's respective 'AA' category medians of 5.0x, 2.6% and
23.4x. Through the interim period, MADS coverage by EBITDA was reported
at 9.7x, cushion ratio at 38.5x, and MADS as percent of revenues further
declining to 1.1%.
Fitch expects that the hospital will maintain its current operating
performance, which should provide for continued strong coverage of a low
Greenwich Hospital's performance is marked by a large degree of
stability owing to its market position in a service area with very
favorable socioeconomic characteristics. The hospital produced operating
income of $15.7 million in fiscal 2013 (year-end Sept. 30), about a 23%
improvement over the prior year and equal to operating and operating
EBITDA margins of 4.6% and 11.3%, respectively. Management expects to
end fiscal 2014 with an operating income in excess of $16 million, which
Fitch views as reasonable and attainable given management's emphasis on
achieving greater operating efficiencies and cost savings.
EVOLVING COMPETITIVE LANDSCAPE
Greenwich Hospital has managed to maintain a steady market share,
despite declining inpatient utilization across the service area and an
increasingly competitive environment. A previously segmented market has
become more consolidated over the past year in Westchester County, from
which Greenwich Hospital generates 50% of its total discharges. As the
competition in Greenwich Hospital's service area continues to evolve,
the hospital will continue to leverage its relationship with YNHHS in
order to achieve cost savings, maintain market stability and remain a
key provider in the area.
MEMBER OF YALE NEW HAVEN
The relationship with YNHHS has continued to be a positive driver. The
cancer program at Greenwich Hospital has been successful through
leveraging the system's brand name and using the protocols of the Smilow
Cancer Center at Yale-New Haven Hospital. Several oncologists were
recruited for the Northeast Medical Group (NEMG), which will allow
Greenwich to remain competitive with Memorial Sloan-Kettering (rated
'AA') as they are opening a new outpatient treatment center in Harrison,
NY. NEMG is a 470-physician multi-specialty medical group affiliated
with all three YNHHS hospitals, comprising Yale-New Haven, Bridgeport
Hospital, and Greenwich Hospital. Fitch views the relationship with
YNHHS and the strategic direction of the component hospitals favorably.
Greenwich Hospital covenants to disclose annual audits within 150 days
of fiscal year-end to MSRB's EMMA system.
Additional information is available at 'www.fitchratings.com'
Applicable Criteria and Related Research:
--'Revenue-Supported Rating Criteria', June 16, 2014;
--'Nonprofit Hospitals and Health Systems Rating Criteria', May
Applicable Criteria and Related Research:
U.S. Nonprofit Hospitals and Health Systems Rating Criteria
Revenue-Supported Rating Criteria
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Source: Fitch Ratings