Moody's Investors Service said it has upgraded Sharp HealthCare, Calif.'s revenue bond rating to A1 from A2, affecting $475 million of rated debt.

Debt was originally issued by ABAG Finance Authority for Nonprofit Corporations, and the California Health Facilities Financing Authority. The outlook is positive.

The upgrade of the revenue bond rating to A1 from A2 and the continuation of the positive outlook reflect the maintenance of strong operating performance, the material improvement of balance sheet measures, and the absence of significant capital projects beyond the current fiscal year.

Despite a challenging payer mix, management has been able to improve profitability, and sustain performance at the higher level. Patient volume growth has been good, and Sharp is growing market share.

If operating performance can be sustained at current levels, and balance sheet measures continue to improve, Moody's said it would expect to upgrade the rating to Aa3 within the next two years.

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