NEW YORK - Fitch Ratings said it has downgraded to A-minus from A $23.9 million of outstanding revenue refunding certificates, series 1998, issued by Cape Canaveral Hospital District (CCHD), Fla., on behalf of Cape Canaveral Hospital (CCH). The bonds are an obligation of Health First, Inc., which is the sole corporate member of CCH. Fitch does not rate Health First's other outstanding debt.
The rating outlook is revised to stable from negative.
With 2009 debt issuance to build a new hospital in Viera, Health First is more leveraged, with capital and debt related balance sheet indicators falling below Fitch's 'A' category medians.
Health First needs to fund an additional $75 million for the Viera Hospital, which could further pressure capital and balance sheet indicators.
After negative operations in fiscal 2007, Health First has had solid operating results in the past two fiscal years and through the interim period; its 3.4% operating margin and 9.7% operating EBITDA margin in fiscal 2009 exceeded Fitch's 'A' category medians.
Health First benefits from a leading market share, with just under 60% of inpatient admissions in Brevard County.
Health First is an integrated system with three hospitals, a profitable health plan, physician groups, and primary care clinics.
Capital spending has averaged about 230% of depreciation over the past five years, as compared to Fitch's 'A' category median of 154.9%, which reflects competitive local service area, with Wuesthoff, a significant local competitor.
