Fitch Ratings revised its outlook on Olmsted Medical Center's BBB-minus rating to positive from stable due to positive operating margins and an improved balance sheet. Analysts expect continued improvements even with the upcoming issuance of $20 million of new debt.
Credit concerns include OMC's small revenue base, concentration among top physician producers, and the size, scope, and structure of the debt issuance.
Bond proceeds of next year's deal would finance construction of a new clinic in northwestern Rochester, which Fitch views as a credit positive as OMC strengthens its reach into that market.
OMC operates a 61-bed hospital in Rochester, an 88,000-square-foot medical office building, 10 branch clinics throughout southeast Minnesota, and a wellness center. The system generated revenues of $131.4 million in fiscal 2008.