Hospital Rises From Junk

Standard & Poor’s has raised its rating to BBB-minus from BB on revenue bonds issued for Princeton Community Hospital.

The upgrade gives the small facility in southern West Virginia an investment-grade rating on $37 million of outstanding debt for the first time since 2001. The outlook is stable.

“The upgrade reflects our assessment of PCH’s sustained improvement in operating results and cash flow over the past several years that has contributed to improve balance-sheet metrics that are more consistent with an investment-grade rating,” analyst Stephen Infranco said in a report last week.

Fiscal 2010 results were in line with expectations despite some underlying business volume pressure and reduction in net patient revenue, he said.

Hospital management has implemented cost-containment initiatives and offset the reduced revenue with operating expense reductions.

Moody’s Investors Service affirmed its Ba3 rating on the bonds in September and has maintained junk ratings on PCH’s debt since 2001.

The hospital’s bonds were issued by the city of Princeton, with $9.9 million of revenue refunding bonds in 1993 with final maturity in 2018, and $40 million of bonds in 1999 with final maturity in 2029.

The 1993 bonds were rated BBB-plus by Standard & Poor’s and Baa1 by Moody’s. The 1999 bonds were rated BBB and Baa2, respectively.

The bonds appear to be trading at or near par.

No rating reports were found on the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access website.

The last financial report on EMMA was filed for the fiscal year that ended June 30, 2009.

PCH is a 267-bed, acute-care health care facility with more than 100 doctors and 1,000 employees that has suffered from a declining area-population base and below-average income levels, according to analysts.

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Healthcare industry West Virginia
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