BRADENTON, Fla. — Daytona Beach, Fla.-based Halifax Hospital Medical Center plans to issue about $112 million of revenue refunding bonds boosted by two rating upgrades.
Fitch Ratings raised its rating on the Halifax's outstanding bonds to BBB-plus from BBB, and assigned the BBB-plus rating to the upcoming deal. The refunding is expected to price the week of April 13, according to Fitch.
Standard & Poor's raised its rating to A-minus from BBB-plus ahead of the deal, which will refund a portion of Halifax's outstanding 2006A bonds. Both agencies assign stable outlooks.
In addition to discussing the Medical Center's favorable finances, analysts also commented on last year's successful conclusion of a federal whistleblower's lawsuit involving false claims and Medicare overbilling. The case cost the hospital $86 million to settle the government's claims and $10 million for attorneys' fees. The hospital also agreed to a five-year oversight program to ensure compliance with federal health care laws.
Fitch said its rating upgrade was driven by sustained improvement in operating cash flow well ahead of expected results.
"The upgrade to BBB-plus is further supported by Halifax's balance sheet strength, which remains healthy for the category despite the sizeable $85 million settlement payment in March 2014," said Fitch analyst Emily E. Wadhwani.
As of Jan. 31, 2015, the hospital had available liquidity of $344.5 million and 279.7 days of cash on hand, or a 15.3 times cushion ratio, Wadhwani said.
S&P's said its rating upgrade was based on the agency's Dec. 15 criteria for U.S. nonprofit acute-care stand-alone hospitals. While S&P included a history of the federal litigation in its report, the penalties were not considered in the financial evaluation of the hospital since the case has been closed.
Halifax had about $352 million of outstanding long-term debt as of Sept. 30, 2014.
The health system serves northeastern Volusia County along the Atlantic coast. A 568-bed hospital in Daytona Beach and an 80-bed community hospital in Port Orange are among its facilities.