SAN FRANCISCO — Moody's Investors Service revised its the outlook on A2-rated Seattle Cancer Alliance revenue bonds to positive from stable.
The Aug. 15 action affects $82 million of rated bonds issued by the Washington Health Care Facilities Authority for the center. Including unrated bonds, the center has $102 million of debt outstanding.
"The affirmation of the A2 rating and the revision of the outlook to positive is driven by SCCA's strong revenue growth, its strong balance sheet, its good market position and strong brand penetration, and its maintenance of strong operating margins," Moody's analysts said in a report. "Debt measures are good for the rating category."
SCCA, jointly owned by Fred Hutchinson Cancer Research Center, Seattle Children's Hospital, and the University of Washington, is one of the leading providers of cancer care in the Pacific Northwest. SCCA received initial capital from its owners and retains ongoing oversight and clinical synergies from then.
The center is almost entirely dependent on outpatient services, and its exclusive focus on cancer lacks the diversification of most rated healthcare providers, Moody's said. The SCCA is also challenged by the highly competitive market for oncology services in the region, which includes other strong cancer programs, such as Swedish Health Services and Virginia Mason Medical Center.
The center also plans to eventually expand its primary facility, which could occur in the next couple of years. This could significantly impact debt and balance sheet measures, Moody's said.
"Nevertheless, the organization has continued to perform well, and an upgrade may occur if the current trajectory is maintained, and if a capital plan can be articulated that doesn't weaken cash and debt measures materially," analysts said.
