North Broward Hospital District, FL's Bonds Rated 'AAA/A-1+' And 'A-'; Outlook Stable
NEW YORK (Standard & Poor's) July 21, 2005--Standard & Poor's Ratings Services
said it assigned its 'AAA/A-1+' rating and 'A-' underlying rating (SPUR) to
North Broward Hospital District (NBHD), Fla.'s $71.5 million series 2005A
revenue refunding bonds. In addition, Standard & Poor's affirmed its 'A-'
standard long-term rating on NBHD's series 2001 bonds and the 'A-' SPUR on the
district's series 1997 bonds. The outlook is stable.
The 'AAA' long-term rating on the series 2005A bonds is based on bond
insurance provided by MBIA. The 'A-1+' short-term rating is based on a standby
bond purchase agreement provided by Citibank N.A.
"The 'A-' SPUR reflects the current management team's continued focus on
improving core operations through revenue-enhancement initiatives and general
cost containment," said Standard & Poor's credit analyst Stephen Infranco.
As a result, NBHD continues to post positive and improving operating
surpluses, contributing to an overall improvement in balance sheet strength.
Historically, NBHD generated adequate cash flow to cover debt service, but
liquidity was relatively low for the rating level. However, the stronger cash
flow during the last several years, combined with an effort to reduce days in
account receivable, has contributed to NBHD's improved cash position and
financial profile. Although liquidity is still somewhat low for the rating
level, the trend is encouraging and more in line with Standard & Poor's
expectations.
The 'A-' rating also reflects the continued improvement in operating
performance and cash flow; the four-hospital system's favorable utilization
trends and dominant market position in the highly competitive Broward County,
with a 34% primary market share, compared with 31% several years ago; and
strong and consistent tax revenue (16.8% of total revenues) that has grown
roughly 37% since 2001 to $175 million in 2004. Another rating factor is the
historically strong population growth in Broward County, with continued growth
projected for the next several years.
Continuing credit concerns include adequate and improving liquidity,
although it is still limited for the rating; moderate leverage, with long-term
debt to capital at 47% in 2004, though the debt burden is low at just 2%; and
lower business volumes in fiscal 2004 and the 10-month interim period ended
April 2005. An additional concern is the district's large and growing share of
indigent and charity care patients, which is contributing to higher levels of
bad-debt expense relative to total net patient revenue (32% in fiscal 2004),
coupled with the lack of tax rate flexibility, as the district is operating at
nearly the maximum millage allowed (2.5 mills).
The stable outlook reflects Standard & Poor's expectation that NBHD will
continue to build on the financial improvement experienced during the past two
years.
Complete ratings information is available to subscribers of
RatingsDirect, Standard & Poor's Web-based credit analysis system, at
www.ratingsdirect.com. All ratings affected by this rating action can be found
on Standard & Poor's public Web site at www.standardandpoors.com; under Credit
Ratings in the left navigation bar, select Find a Rating, then Credit Ratings
Search.
| Primary Credit Analyst: | Stephen Infranco, New York (1) 212-438-2025; stephen_infranco@standardandpoors.com |
| Secondary Credit Analyst: | Charlene Butterfield, New York (1) 212-438-2741; charlene_butterfield@standardandpoors.com |
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