Standard & Poor's Ratings Services said it raised its rating on Norman Regional Hospital Authority, Okla.'s series 2007 revenue and refunding bonds and series 2005 and 2002 revenue bonds, issued for Norman Regional Health System, one notch to BBB-minus from BB-plus.
The outlook is stable.
The upgrade reflects Standard & Poor's assessment of several years of the system's sustained and improved operating performance after a period of volatility, coupled with better-than-expected fiscal 2013 operating results and an improved balance sheet with unrestricted reserves that are more consistent with the higher rating and the system's leading market share in the primary service area.
The destruction of NRHA's Moore Hospital due to a tornado in May 2013 has had a minimal financial effect on the system due to management's ability to navigate this challenge, demonstrated by its continued stable financial performance despite the interruption of business and good insurance recovery. Standard & Poor's view of NRHA reflects its underlying operational performance and the effect of the tornado on the system.
"We could lower the rating if unrestricted reserves were to decrease such that reserves as a percent of long-term debt were to decrease below 50% and operational performance were to deteriorate such that it resulted in less than 2x debt service coverage," said Standard & Poor's credit analyst Margaret McNamara. "Although unlikely due to the light unrestricted cash to long term debt ratio and moderately high leverage, we could raise the rating if unrestricted reserves were to improve significantly such that unrestricted reserves to long term debt were in excess of 1x and margins were better than 2%."
The stable outlook reflects Standard & Poor's opinion of the authority's improved liquidity, stable operating performance despite current challenges, and solid business position.
