HealthEast Upgraded to Investment Grade

HealthEast Care System won back its investment-grade rating last week from Standard & Poor's in recognition of its improving balance sheet.

The Minnesota system's rating jumped to BBB-minus from BB-plus. It affects debt issued through the Washington County Housing and Redevelopment Authority and the St. Paul Housing and Redevelopment Authority.

The agency also increased to BB-plus from BB lease-backed bonds issued in 2005 through the St. Paul Port Authority.

"We raised the ratings to reflect our favorable view of HealthEast's stable patient utilization and leading market share and steadily improving financial performance, liquidity and debt leverage," said Standard & Poor's analyst Ken Rodgers. "At the same time, the system has demonstrated restraint in new debt issuance and has recently moderated its capital spending."

Other factors influencing the rating include a slight uptick in its leading east metro St. Paul market share, which is a competitive market; slow and steadily improving financial performance; and debt service coverage that has exceeded two times for the past two years and shows increased strength at 2.9 time for the nine months ended May 31.

While financial performance, liquidity and debt leverage have showed improvement, and thus warrant the higher ratings, they are still only adequate to support the minimum investment-grade rating for the senior debt, analysts said.

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Healthcare industry Minnesota
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