NEW YORK - Standard & Poor's Ratings Services has raised its rating to BBB from BBB-minus on Princeton, W. Va.'s series 1999 revenue bonds issued on behalf of Princeton Community Hospital (PCH). In addition, Standard & Poor's assigned its BBB rating to Princeton's series 2012 health care revenue refunding bonds issued for PCH.
"The rating assignment and upgrade reflects our assessment of PCH's sustained operating and cash flow improvement over the past several years, which has contributed to improved balance sheet metrics that are more consistent with a higher rating," said Standard & Poor's credit analyst Stephen Infranco. "Furthermore, the fiscal 2011 results were in line with our expectations, in part, due to a rebound in business volume contributing to net patient revenue growth," said Infranco
The rating further reflects Standard & Poor's view of PCH's: relatively stable and leading market share; good operating performance; favorable balance sheet for the rating.
Partly offsetting credit trends include PCH's: weak demographic factors, including a declining population base and below-average income levels; vulnerability to shifts in business volume; and high Medicaid population.
The stable outlook reflects Standard & Poor's assessment of PCH's sustained improvement in operations, cash flow, and liquidity, allowing greater flexibility to handle operating stress at the current rating level. Standard & Poor's expects PCH to manage its capital needs with internally generated cash flow.
According to Standard & Poor's, a positive outlook or higher rating would be possible if PCH could demonstrate more consistency in business volumes, especially given the weaker demographics of the service area, accompanied by further improvement in liquidity and leverage metrics.
While not expected, a substantial decline in operating income or balance sheet strength could pressure the rating, as could an unexpected and large capital program or related debt issuance.