Moody's Investors Service said it has upgraded the bond rating for Firelands Regional Medical Center, Ohio, to Baa1 from Baa2, affecting $79 million of debt.

At this time, Moody's revised the outlook to stable from positive.

The Baa1 rating is based on the hospital's leading market position and limited competition, good operating margins, strong unrestricted investment balance, moderate capital needs, and fixed rate debt structure. These strengths are offset by a very high debt load driving moderate debt measures, aggressive investment allocation that results in reduced liquidity relative to peers, and a very large swap program.

The rating upgrade is based on several years of consistently improving operating margins and growth in unrestricted cash and investments, which has resulted in better debt measures. The stable outlook is based on Moody's expectations that the hospital will at least maintain current margins given recent acquisitions of profitable physician-owned businesses and additional commercial and government reimbursement. Additionally, there are no new debt plans and capital projects are manageable.

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