Standard & Poors last week revised its outlook to stable from negative on Agnesian HealthCare Inc. in connection with its upcoming $49 million sale of new-money and refunding auction-rate bonds. The agency also affirmed its A-minus rating on the systems $100 million of outstanding debt.
The new debt is being sold early next month through the Wisconsin Health and Educational Facilities Authority.
The outlook revision reflects strong unaudited financial performance for fiscal 2005 that is substantially better than budgeted and the same period last year, credit analyst Suzie Desai said in the agencys report issued late last week.
Standard & Poors also cited steady improvement in the hospital systems volume figures after a few years of flat to declining numbers, and continued maintenance of solid market-share trends in its primary service area. However, analysts wrote: An offsetting credit factor is a balance sheet that has remained stable, but is weak relative to rating category medians.
Agnesian will use $30 million of the upcoming sale to refund outstanding debt, with another $15 million financing a new ambulatory surgery center and medical office building about five miles from Agnesians main facility, St. Agnes Hospital, in Fond du Lac. The remaining proceeds will cover other capital expenses and costs of issuance.
The new surgery center and office building are being undertaken to address capacity constraints and to help the system maintain its market share and competitive position in the area. The hospital competes with one other ambulatory surgery center in the region owned by Aurora Health Care.
In addition to St. Agnes, the system operates Waupun Memorial Hospital, St. Francis Home, Consultants Laboratory, Agnesian HealthCare Enterprises, and St. Frances Home of Fond du Lac.
Moodys Investors Service last week affirmed its A3 credit on Agnesian. The bonds are expected to carry insurance from CIFG. Piper Jaffray & Co. is the underwriter and Ponder & Co. is the financial adviser on the sale.
