Tampa General Hospital in west-central Florida has been upgraded to A from A-minus by Fitch Ratings due to a "significant strengthening of liquidity metrics."
The A rating applies to $37 million of 2013A hospital revenue refunding bonds, $161.7 million of 2012A refunding bonds, and $177.2 million of 2006 revenue bonds. The outlook is stable, Fitch Ratings said July 15.
The bonds were issued on behalf of TGH by the Hillsborough County Industrial Development Authority.
"The rating upgrade reflects a significant strengthening of liquidity metrics, sustained improvements in profitability, and strong coverage metrics," said Fitch analyst Adam Kates.
The acute-care hospital has 277.1 days cash-on-hand providing a cushion ratio of 29.7 times and 203.1% cash-to-debt, Kates said, adding that the liquidity metrics are strong for the A-rating category.
TGH's profitability continues at improved levels with an operating earnings margin before interest, taxes, depreciation and amortization equal to 10.2% in fiscal 2014 and 9.5% in the six-month interim period ending March 31, he said.
Tampa General is one of seven designated level I trauma centers in the state, one of four burn centers, and is the only provider of adult solid-organ transplants in the region, according to Fitch.
TGH experienced a "material weakening" in fiscal years 2011 and 2012 due to implementation of a new information technology system, statewide Medicaid cuts, and decreased federal disproportionate share hospital funding for treating indigent patients, Fitch said.
"The subsequent operating improvements reflect the completion of the IT implementation as well as revenue capture and expense control initiatives, including expansion of TGH's primary care network," Kates said.
Capital spending is projected to increase in fiscal years 2015 through 2017 to an average of $209 million per year primarily for continued investments in the hospital, primary care and ambulatory sites. Fitch said funding sources are to be determined, but could include the issuance of additional debt.
Tampa General had about $390 million of total debt outstanding as of March 31, composed of fixed-rate bonds.
"Given its light debt burden, solid profitability and strong liquidity metrics, TGH has some additional debt capacity at the current rating," Kates said. "Fitch will assess any credit impact from the capital plans as details become more certain."
