NEW YORK, October 28 (Fitch) Fitch Ratings has downgraded the appraisement on
approximately $38 actor alternation 2002 bonds issued by the Citrus County Hospital
Board (Citrus Memorial Health Foundation, Inc.) on account of Citrus Memorial
Hospital (CMH) to ‘B-‘ from ‘B’.
Additionally, Fitch has revised the Appraisement Watch to Evolving from Negative
reflecting the organization’s proposed auction or charter transaction with Hospital
Corporation of America (HCA), which is in its antecedent stages. Citrus County
Hospital Board (CCHB) and Citrus Memorial Health Foundation (CMHF) accept agreed
to a transaction, and a letter of absorbed (LOI) is accepted to be active by
Fitch expects to dness the Appraisement Watch aural the aing six months as the
transaction’s final agreement and likelihood of success become clearer.
The alternation 2002 bonds are anchored by a agreement of gross revenues of the
foundation and a debt account assets fund.
KEY RATING DRIVERS
DOWNGRADE REFLECTS LOWER LIQUIDITY: The appraisement decline to ‘B-‘ reflects CMH’s
continued banking deterioration, which was accent by a cogent drop
in clamminess apprenticed by the aboriginal adjustment of its alternation 2006 bonds. As of Sept.
30, 2013 (year-end; unaudited), CMH’s complete banknote and investments
decreased by about 50% to an complete complete of $14.5 actor from $30 million
in budgetary 2012. Additionally, the organization’s operations connected to be
pressured by undependable tax revenue, advancing acknowledged costs, and added volume
declines. In budgetary 2013, CMH recorded a $4.2 actor accident from operations,
which translated into a abrogating 2.9% operating margin.
COMPLETION OF PENDING TRANSACTION: Resolution of the Appraisement Watch will acceptable be
tied to the achievement of the awaiting transaction, which administration has
indicated would dness all acknowledged disputes amid both hospital boards and
require the alternation 2002 bonds to be redeemed. Failure to complete the
transaction and added banking abasement could, conversely, aftereffect in
negative appraisement pressure.
Citrus Memorial Hospital is a 198-bed association hospital amid in Inverness,
FL, about 75 afar arctic of Tampa. In budgetary 2013 (Sept. 30 fiscal
year-end), CMH had $148.4 actor in complete operating revenue. CMH covenants to
provide anniversary acknowledgment by accounting appeal to bondholders who authority more
than $1 actor in bonds and distributes anniversary banking statements to the
MSRB’s EMMA system.
WEAK FINANCIAL PROFILE
The decline to ‘B-‘ from ‘B’ reflects CMH’s attenuated banking contour since
Fitch’s aftermost analysis (May 2013). Specifically, complete banknote and investments
dropped decidedly to $14.5 actor in budgetary 2013 (unaudited) from $30
million in budgetary 2012. CMH’s antithesis area metrics are anemic at 36.7 canicule cash
on hand, 3.4x beanbag ratio, and 31.7% banknote to debt, which Fitch angle as a
primary acclaim concern. Administration states complete banknote levels alone due
to aboriginal debt repayments, arrangement about-face issues, and assorted capital
expenditures. Overall, Fitch believes CMH’s antithesis area leaves the
organization with basal banking cushion.
In Fitch’s aftermost appraisement review, there was affair over a abeyant default
scenario in affiliation to the alignment not accepting able debt service
coverage. This bearings has been averted as CMH paid off its previously
outstanding alternation 2006 bonds with cash, appropriately convalescent debt account coverage
metrics. In budgetary 2013, CMH had debt account advantage of 1.5x.Additional Disclosure
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PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
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ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
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