Standard & Poor's upgraded Palisades Medical Center to the investment grade BBB-minus from the speculative grade BB-plus on Wednesday, citing its improved balance sheet.
The hospital has $37.8 in outstanding long-term debt and $2.4 million in short-term debt. S&P's action only affects the long-term debt.
The center's improved operating earnings have generated pro forma maximum annual debt service coverage that is solid for a BBB-minus rating, S&P analysts Jessica Goldman and Cynthia Keller wrote. The hospital also benefits from revenue diversity from acute-care and long-term care operations, both of which are profitable.
The center has a stable market share. Since the center's inpatient volumes have been growing, this may improve, the analysts wrote.
The center has benefited and may get additional benefit in the future from the Hackensack University Medical Center.
Among the negatives the analysts mention are PMC's very high debt to capital ratio, the fact that the service area has many other competing hospitals, and the fact that the PMC relies on New Jersey hospital subsidy funding.
S&P has a stable outlook on the hospital, which is located in North Bergen, across the Hudson River from New York City.
On June 4 Moody's Investors Service raised PMC's long-term debt to Ba1 from Ba2.
Fitch Ratings gives PMC's long-term debt a BBB rating.
Moody's has a positive outlook on the debt while S&P and Fitch have stable outlooks.
"We are extremely pleased that Moody's Investors Service, Standard & Poor's and Fitch Ratings have upgraded Palisades Medical Center's bond ratings," said PMC President Bruce Markowitz.