NEW YORK - Standard & Poor's Ratings Services said it revised its rating outlook on New Hampshire Health and Education Facilities Authority's series 1997 bonds, issued for Androscoggin Valley Hospital (AVH), to stable from negative.
The revised outlook reflects AVH's ability to sustain profitable and slightly improved operating margins during a period of economic change in its primary service area, continued balance sheet strength, and the expectation that AVH's operating and excess margins will improve significantly over the next year to two years as the organization realizes continued volume growth from its complement of specialists and its growing base of primary care physicians.
At the same time, Standard & Poor's affirmed its A-minus rating on the authority's series 1997 bonds, issued for AVH. Standard & Poor's also carries a SP-1 rating on the $1.63 million series 2007A capital appreciation notes (CANs) that refinanced its 2006A CANs in April 2007.
The A-minus rating is also supported by ample days' cash on hand and a light debt load; and growing volumes across most measures of utilization. "These credit strengths are pertinent given the risks associated with operating this small, rural hospital," said Standard & Poor's credit analyst Jennifer Soule.
Despite the closure of a major employer within AVH's primary service area in May 2006, the hospital managed to realize improved operating and excess margins through fiscals 2006 and 2005.
AVH reported operating income of $897,000 in fiscal 2006 (including $845,000 related to a onetime reimbursement adjustment from Medicare) and operating income of $170,000 in fiscal 2005. Both years reflected improvement over the $1 million loss reported in fiscal 2004.
AVH has little to no competition and maintains a high 80% market share, with its closest competitor about 30 miles away. AVH's admissions declined by 5% to 1,662 from 1,751 in fiscal 2006, with a greater shift to outpatient services that is has been frequently evidenced with small hospitals. Outpatient visits increased by 3% for the year and outpatient surgeries increased by 7%. Further increases were evidenced in the areas of inpatient surgeries (2%) and births (10%).
The revised rating outlook affects about $7.8 million in debt.
