Fitch Ratings said it has upgraded to BBB-minus from BB-plus the rating on the following revenue bonds issued by Norman Regional Hospital Authority, Okla.: approximately $86.5 million series 2007; approximately $67 million series 2005; approximately $17.4 million series 2002; approximately $15.5 million series 1996B.
The rating outlook is revised to stable from positive.
The bonds are secured by a pledge of gross revenues of the obligated group.
The upgrade reflects Norman Regional Hospital's (NRH) sustained financial metrics that are in line with the BBB-minus rating level.
On May 20, 2013, 45-bed Moore Medical Center (Moore), part of Norman Regional Health System, was struck by a tornado. The hospital was destroyed; however, no patient or staff injuries occurred from the tornado or the evacuation.
All physicians who lost office space were relocated to alternate offices within a week and inpatient needs are being met at NRH's HealthPlex Hospital, located just four miles from the former Moore site. Moore accounted for approximately 10% of NRH's total revenue and plans for a new facility are under discussion. The construction of a new facility is expected to be completed within the next 2 1/2 years and will be financed by insurance proceeds.
NRH holds a leading market share of approximately 55% in its primary service area of Cleveland County. Since City Council must give approval to any hospital or physician construction project, entry into the service area has been limited.
NRH's debt burden continues to abate but is still high as indicated by maximum annual debt service (MADS) equating to 5.6% of fiscal 2013 revenues compared to the 'BBB' category median of 3.5%. However, NRH's solid cash flow in fiscal 2013 resulted in adequate debt service coverage for the rating level at 2.4x.
