News Column

Fitch Affirms Advocate Health Care's (IL) Self-Liquidity Bonds at 'F1+'

July 9, 2014

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has affirmed its 'F1+' short-term rating on the following bonds based on self-liquidity provided by Advocate Health Care Network (Advocate):

--$21.9 millionIllinois Health Facilities Authority revenue bonds, series 2003A;

--$21.2 millionIllinois Health Facilities Authority revenue bonds, series 2003C;

--$21.9 millionIllinois Finance Authority revenue bonds, series 2008C-3B;

--$70 millionIllinois Finance Authority revenue bonds, series 2011B.

KEY RATING DRIVERS

LIQUID RESOURCES AVAILABLE FOR UNREMARKETED PUTS: The 'F1+' rating reflects Advocate's availability of highly liquid resources to cover the mandatory tender on its put bonds. At March 31, 2013, Advocate's eligible cash and investment position available for same-day settlement would cover the cost of the maximum mandatory put on any given date well in excess of Fitch's criteria of 1.25x.

STRONG FINANCIAL PROFILE: Fitch rates Advocate's long-term obligations at 'AA'. The long-term rating reflects Advocate's consistently strong operating performance, light debt burden, robust liquidity and leading market position. Advocate's solid operating cash flow generation continues to support substantial balance sheet strength and its liquidity indicators consistently exceed Fitch's 'AA' category median ratios.

RATING SENSITIVITIES

MAINTENANCE OF ADEQUATE LIQUIDITY: Fitch expects Advocate to sustain adequate internal liquid resources to cover its total put exposure in excess of 1.25x to maintain the 'F1+' short-term rating.

CREDIT PROFILE

Advocate is an integrated health care system serving the Chicago metropolitan area and central Illinois. The system includes 11 acute care hospitals and a children's hospital (totaling approximately 3,500 licensed beds), primary and specialty physician services, home health, hospice, and outpatient centers serving the Chicago metropolitan area and central Illinois. Total revenues in audited fiscal 2013 (Dec. 31 fiscal year end) were $4.9 billion.

Fitch's analysis is based on the consolidated system. The obligated group consists of Advocate Health Care Network Corp, Advocate Health and Hospitals, Advocate North Side Health Network, and Advocate Condell Medical Center. As of Dec. 31, 2013, the obligated group represented approximately 86% of total assets and 88.7% of total operating revenues of the consolidated system.

SELF-LIQUIDITY

Advocate provided Fitch with an internal procedures letter outlining the procedures to meet any un-remarketed puts. In addition, Advocate provides monthly liquidity reports to Fitch to monitor the sufficiency of Advocate's cash and investment position relative to its mandatory put exposure.

DISCLOSURE

Advocate's disclosure includes annual audited financial statements as well as quarterly unaudited balance sheet, income statement, cash flow statement, an extensive MD&A, and utilization statistics. The information is posted to the Municipal Securities Rulemaking Board's EMMA system. In addition, management holds routine calls with rating agencies and with investors. Fitch considers Advocate's disclosure standards to be best practice.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Rating U.S. Public Finance Short-Term Debt', (Dec. 9, 2013);

--'U.S. Nonprofit Hospitals and Health Systems Rating Criteria' (May 30, 2014).

Applicable Criteria and Related Research:

Rating U.S. Public Finance Short-Term Debt

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724680

U.S. Nonprofit Hospitals and Health Systems Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=746860

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=838777

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Primary Analyst

Emily E. Wadhwani, +1 312-368-3347

Associate Director

Fitch Ratings, Inc.

70 W. Madison Street

Chicago, IL 60602

or

Secondary Analyst

Kathleen Proux, +1 312-368-3348

Analyst

or

Committee Chairperson

James LeBuhn, +1 312-368-2059

Senior Director

or

Media Relations, New York

Elizabeth Fogerty, +1 212-908-0526

elizabeth.fogerty@fitchratings.com

Source: Fitch Ratings


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