Standard & Poor's last week revised its outlook to positive from stable for AHS Hospital Corp., which operates three facilities in northeastern New Jersey. The rating is A.

The outlook revision is due to improved cash flow and debt-service coverage. In addition, analysts said AHS will improve its market presence in the area with its April 1 acquisition of Newton Memorial Hospital. Atlantic Health System is AHS' parent company.

"The outlook revision and the rating affirmation reflect our assessment of Atlantic's second year of solid operating performance and overall cash flow and continued improvement in unrestricted cash and investments combined with a sound growth strategy," Standard & Poor's analyst Martin Arrick said in a report.

"We believe the preceding credit strengths are partly offset by Atlantic's additional debt and an evolving and competitive service area."

AHS plans to issue $170 million of Series 2011 revenue bonds this month or next through the New Jersey Health Care Facilities Financing Authority.

The sale will help finance the health care provider's infrastructure needs and expansion projects at AHS' corporate offices, Morristown Memorial Hospital, and Overlook Hospital, according to the HCFFA's web site.

The debt transaction will also refinance previously issued Newton Memorial Hospital bonds. Challenges for the credit include rising debt levels, large pension liabilities, and a competitive health-care environment.

Standard & Poor's could raise the rating depending upon future financial trends and if AHS successfully incorporates Newton Memorial Hospital into its operations, among other factors.

AHS will have $514.3 million of outstanding debt, including the Series 2011 bonds, according to Moody's Investors Service. Moody's rates the Series 2011 bonds A1.

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