Moody's Investors Service said it has upgraded to A2 from A3 the underlying ratings assigned to Hendrick Medical Center, Texas's $98 million of Series 2009A&B fixed rate and Series 2009C variable rate bonds issued by the Tarrant County Cultural Education Facilities Finance Corporation.
The outlook is stable at the higher rating level.
Hendrick Health System (Hendrick) is comprised of 522-licensed bed Hendrick Medical Center (HMC) and Hendrick Medical Development Corporation (HMDC). Hendrick Medical Center Foundation (Foundation) is a subsidiary of HMC.
The rating upgrade is attributable to the successful completion of Project 2010 with the opening of the new patient tower in January 2012 that, along with the acquisition of a cardiology group, contributed to growth in admissions in 2012 for this hospital with a leading market position and limited competitive pressures.
Operating cash flow margins continue a trend in the double digit range, although a slight decline was reported in 2013.
The anticipated decline in liquidity with the equity contribution toward Project 2010 has rebounded in 2013 to 179 days cash on hand and 129% cash-to-debt at February 28, 2013. Despite the downturn in cash flow generation in 2013, peak debt service coverage remains strong at 5.0 times.
Hendrick will continue to be challenged by a high dependency on government reimbursement (60% of gross revenues) and self-pay (11%), and remains at a competitive risk with no certificate of need regulation in the state.
