BRADENTON, Fla. Catholic Health East is scheduled to sell $72.1 million of fixed-rate health system revenue bonds tomorrow for projects at two Florida hospitals and another in Delaware, ahead of a $250 million bond issue requested by another South Florida hospital.
The CHE deal is comprised of two series issued by the Miami Health Facilities Authority $35.6 million of Series 2003B bonds and $16.5 million of Series 2003C bonds and one issue by the Delaware Health Facilities Authority for $20 million of Series 2003D bonds.
Proceeds will be used for various capital projects at Holy Cross Hospital in Fort Lauderdale, Fla., Mercy Hospital in Miami, and St. Francis Hospital in Wilmington, Del.
Serial and term bonds are expected to be sold in maturities from 2004 to 2033, negotiated by Merrill Lynch & Co. Bond counsel is Hawkins, Delafield & Wood. Underwriters counsel is Foley & Lardner.
The CHE transaction is being brought to market ahead of a $250 million debt sale that is being sought for Jackson Memorial Hospital in Miami, a licensed 1,567- bed nonprofit public hospital.
Theres quite a bit going on in that market, said Jeff Newham of Merrill Lynch, referring to the competition between medical facilities in the South Florida area.
Jackson Memorials overseeing board, Public Health Trust, voted on Sept. 29 to ask the Miami-Dade County Commission to issue $250 million of debt for its capital program. No one with Jackson Memorial could update the status of the bond issue.
For the CHE deal, an A-plus has been assigned by Fitch Ratings, an A2 by Moodys Investors Service, and an A rating by Standard & Poors.
We believe CHEs recent progress in improving operations is notable, including a significant improvement in 2002 and through eight months of 2003, reversing six years of operating losses, said the report written by Moodys analyst Lisa Martin.
Operating results have improved each year since 1999, when a $78 million loss was recorded. The loss diminished each year, and operating results turned positive in 2002 with earnings of $64 million, according to research by Standard & Poors analyst Liz Sweeney.
The current years eight-month unaudited performance through August shows strong operating income of $65 million, or a 2.62% operating margin, Sweeneys report said.
Although [patient] volume trends have been positive, CHE operates in competitive markets and increased competition from other health care facilities and freestanding specialty providers presents a concern, said a report by Fitch analyst Adam Kaplan.
CHE, headquartered in Newtown Square, Pa., operates 35 hospitals, 31 long-term care facilities, 21 senior residential facilities, and three behavioral health facilities in 11 states in the eastern U.S.
