LOS ANGELES — Moody's Investors Service upgraded Children's Hospital Central California to A1 from A2 and revised the outlook to stable from positive.

The upgrade affects $151 million of outstanding fixed rate certificates of participation issued by the Madera County, Calif.

"The A1 rating and stable outlook is based on strong market position, track record of solid operating performance and a robust balance sheet offsetting risks associated with a high Medi-Cal payer mix and challenging service area demographics," Moody's said in a recent report.

Analysts said the Central Valley region is characterized by high unemployment, flat population growth, and median income levels. However, the hospital's market position is strong, with a 78% inpatient market share in Madera and Fresno counties, based on 2011 data.

Located in Madera, 13 miles north of Fresno and about 180 miles southeast of San Francisco, the hospital serves a large rural geographic region across nine counties between San Francisco and Los Angeles.

"The balance sheet is very strong with a low and manageable debt load and a material boost in unrestricted liquidity in recent years from the California provider fee program," Moody's said.

As of June 30, 2013, total unrestricted cash and investments increased to $532.4 million.

Moody's expects operating cash flow generation to remain favorable due to the hospital's strong market position, benefits gained from several ongoing strategic initiatives to extend the hospital's market reach, and ongoing performance improvement initiatives.

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