Standard & Poor's Ratings Services lowered its long-term rating to A-minus from A on the Lincoln County Hospital Authority No. 1, Neb.'s series 2009 and 2002 bonds and its underlying rating (SPUR) to A-minus from A on the authority's series 2002 bonds.
Standard & Poor's Ratings also assigned its A-minus long-term rating to the authority's $110 million series 2012 hospital revenue and refunding bonds. All bonds were issued for Great Plains Regional Medical Center. The outlook is stable.
Standard & Poor's will withdraw its ratings on the series 2009 and 2002 bonds after they have been fully refunded by the series 2012 bond proceeds.
"The rating action reflects our view of the anticipated balance sheet deterioration resulting from the debt issuance for a new patient tower, which, in our view, is offset by GPRMC's strong business position and consistently healthy operating performance," said Standard & Poor's credit analyst Avanti Paul.
The A-minus ratings further reflect GPRMC's: strong business position as Lincoln County's only health care provider and its service as a rural referral center with minimal competition in the surrounding area, which will improve as a result of the hospital's expanded services; good utilization in fiscal years 2011 and 2012 partly from continued successful physician recruitment in the past two years and which S&P believes will be sustained; consistently healthy operating levels, generating adequate pro forma maximum annual debt service (MADS) coverage; and growing unrestricted reserves, resulting in strong cash on hand for the rating that will further increase as a result of manageable routine capital spending.
The stable outlook reflects that GPRMC will continue to generate healthy operating margins as a result of its dominant market position, successful physician recruitment, and good utilization.