Global Header | Moody's
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Rating Update:

MOODY'S AFFIRMS RIVERVIEW HOSPITAL'S (IN) Baa1 BOND RATING; OUTLOOK REMAINS STABLE

08 Dec 2010

AFFIRMATION AFFECTS A TOTAL OF $52.9 MILLION OF BONDS OUTSTANDING

Indiana Health Facility Financing Authority
Health Care-Hospital
IN

Opinion

NEW YORK, Dec 8, 2010 -- Moody's Investors Service has affirmed the Baa1 long-term bond rating assigned Riverview Hospital's (IN) (Riverview) $52.9 million of outstanding bonds issued by the Indiana Health Facility Financing Authority (see RATED DEBT section at end of report). The rating outlook is stable.

LEGAL SECURITY: Under the Master Indenture, the Series Bonds are secured by Pledged revenues including present and future accounts receivable, general intangibles, and all revenue and income, including income from investments and leases. The series 2004 bonds are additionally secured by an irrevocable Letter of Credit (LOC) from PNC Bank and carries an A2/VMIG 1 rating expiring on 12/15/2012.

INTEREST RATE DERIVATIVES: None

RATING RATIONALE: The Baa1 debt rating with a stable rating outlook on Riverview's outstanding debt reflects recent increases in inpatient admissions and outpatient surgeries, its status as a county owned hospital, an improved absolute cash position, and its strong but declining market position in the primary service area despite thinning revenues and financial performance through nine months of FY 2010 and intensifying competition from large systems consolidating around Riverview's primary service area.

STRENGTHS

*Improved cash position and balance sheet measures as of September 30, 2010 with 143.2 days cash on hand and 98.6% cash to debt, compared to 135.6 days and 88.8% cash to debt at the end of fiscal year (FY) 2009

*Inpatient (2%) and outpatient surgical (9%) volume growth through nine months of FY 2010 as compared to declines of 3% and 8%, respectively, in FY 2009

*Located in wealthy service area with median household income well above state and national average experiencing growth, though slowed with the continued recession

*Leading market share (~40%) in primary service area (PSA), however it has declined over the past four years

*As an Indiana Authority hospital, Riverview has the legal ability to seek designated tax revenues from Hamilton County; management notes, however, that Riverview has never received tax revenue and has no intention of pursuing this potential revenue stream

CHALLENGES

*Decline in operating revenue through nine months of FY 2010 with multiple years of flat or declining inpatient admissions and outpatient surgeries; we note through nine months of FY 2010 outpatient surgical volume has increased 9% due to the orthopedic group joining the hospital in FY 2009

*Thinning financial performance through nine months of FY 2010 with an operating loss of $200 thousand (-.2% margin) as compared to the $954 thousand operating income (0.9% margin) through the same period in FY 2009; management, however, expects to end the year with an operating income of $1 to 2 million

*Small hospital averaging 5,400 admissions and $145 million in revenues leaves the hospital vulnerable to changes in the industry

*Intensifying competition in secondary service area (SSA) from multiple providers of considerable size, many of which are expanding their network's reach with strategic investments in Hamilton County

RECENT DEVELOPMENTS/RESULTS

We view Riverview's location in Hamilton County, which has experienced over 47% growth since FY 2000 and has been somewhat shielded from the current recession, as a credit strength. This sustained growth has in large part occurred in the southern part of the county in the cities of Carmel, Fishers, and Noblesville, the city where the hospital is located. Riverview defines its PSA as eight zip codes mostly north of Noblesville in a more rural part of the county, Carmel and Fishers are located eight to ten miles south in its SSA. Riverview enjoys leading market share in its PSA however the percentage has declined to 39.4% in 2009 from 42.6% in 2006.

While Riverview's location and leading market share are credit positives, the competition from large hospital systems in the area is a growing concern. Clarian Health Partners (rated A1) has recently acquired a hospital in Tipton, Indiana, 20 miles north of Riverview and is building a new 40-bed hospital in Fishers, eight miles south of Riverview. This new hospital should open in early 2012 and could cause further erosion of Riverview's market share. Ascension Health (rated Aa1) views central Indiana and Indianapolis as core markets and we expect the system will consider strategic opportunities in order to boost market share. Community Health System is another not-for profit system that is dominant in the south and west areas of Hamilton County and has a joint venture with Riverview to offer high school sports medicine services in the Northeast area of Hamilton County. We do believe Hamilton County will continue its strong growth into the more rural northern part of the county and as it does so will these large health systems.

In FY 2009, Riverview reported favorable financial performance with an operating income of $3.0 million (2.1% margin) when compared to operating income of $1.8 million (1.2% margin) in FY 2008, (revised to exclude disproportionate share of $4.0 million received for prior years). Operating cash flow for FY 2009 was $15.3 million (10.4% margin) up slightly from $14.5 million (10.0% margin) recorded in FY 2008.

Through nine months of FY 2010 ending September 30, 2010 Riverview has seen a decline in financial performance with an operating loss of $200 thousand (-.2% margin) and operating cash flow of $8.7 million (8.0% margin) as compared with an operating income of $954 thousand (0.9% margin) and cash flow of $10.2 million (9.3% margin) in the comparable period of FY 2009. Management attributes this performance to a shift in payer mix away from commercial payors to self-pay and Medicaid. Revenues for this small sized provider ($144.8 million in total revenues) are down 0.6% through September 30, 2010 over the prior year comparable period. Management attributes this decline to a reclassification of self-pay patients causing an increase in charity care and a decrease in bad debt. Riverview has seen an increase in volumes in inpatient admission (2%), outpatient surgery (9.3%), and total surgeries (9%) and expects to end the year with a $1.0 to $2.0 million operating income. Notably, financial performance has benefitted from flat expense growth of 1% through September 30, 2010, achieved with the change in the qualification for charity care causing reduced bad debt and improved supply expense management. This is the third consecutive year management has held expenses flat. Previous years this was achieved through managing staffing levels, implementation of a formal paid time off program, and revisions to the employee health insurance plan. When annualizing nine months of FY 2010, the operating loss is approximately $270 thousand (-.2% operating margin) and an operating cash flow margin of $11.6 million (8.0% margin). With annualized FY2010 interim results, Riverview's debt service coverage levels are estimated to fall slightly to 3.3 times maximum annual debt service (MADS) coverage from 3.9 times in FY 2009, still in line with the Baa1 median of 3.3 times MADS coverage.

Despite the decline in financial performance, Riverview's unrestricted cash and investment balance has improve approximately 6.5% as of September 30, 2010 to $53.1 million (143.2 days cash on hand) from $49.9 million (135.9 days cash on hand) at fiscal yearend (FYE) 2009. The increase in cash was due to lower capital spending in fiscal years 2009 and 2010 and improved investment returns. Riverview's age of plant is 10.9 years. Riverview's unrestricted cash was 35% invested in equities, 65% fixed income and cash at FYE 2009. Capital spending is budgeted equal to depreciation for FY 2010 including renovation of shelled space to increase capacity and create a centralized registration point. Riverview has defined contribution pension plan for all employees. As a result of the improvement in absolute liquidity, cash to debt increased to 99% at September 30, 2010 from 88% at FYE 2008. The hospital's debt is 35% variable rate and 65% fixed with no new debt plans; cash provides 271.2% coverage of demand debt.

Outlook

Moody's stable rating outlook reflects our expectation of continued volume growth through the end of FY 2010 resulting in another year of modest operating income; despite our concern about the growing competition from large systems consolidating around Riverview's PSA and the nine months of flat operating revenue and thinning financial results in FY 2010.

What could change the rating--UP

Sustained Improvement in financial performance and liquidity position; material increase in volumes; no loss in market share or change in the competitive environment of this market

What could change the rating--DOWN

Material decline in volumes; material decline in liquidity; revenue declines; increase in debt load without commensurate increase in cash flow; loss of market share; increased competition

KEY INDICATORS

Assumptions & Adjustments:

-Based on financial statements for Riverview Hospital

-First number reflects audit year ended December, 31, 2009

-Second number reflects unaudited annualized 9 months FY 2010

-Investment returns normalized at 6% unless otherwise noted

*Inpatient admissions: 5,735; 5,797

*Total operating revenues: $136.7 million; $144.8 million

*Moody's-adjusted net revenue available for debt service: $18.8 million; $16.1 million

*Total debt outstanding: $56.2 million; $53.9 million

*Maximum annual debt service (MADS): $4.8 million; $4.8 million

*Moody's-adjusted MADS Coverage with normalized investment income: 3.9 times; 3.3 times

*Debt-to-cash flow: 3.4 times; 3.9 times

*Days cash on hand: 147.4 days; 143.2 days

*Cash-to-debt: 88.8%; 98.6%

*Operating margin: 2.2%; -0.2%

*Operating cash flow margin: 11.2%; 8.0%

OUTSTANDING BONDS (as of June 30, 2010)

-Series 1999: $8.4 million outstanding; Baa1

-Series 2002: $20.0 million outstanding; Baa1

-Series 2004: $18.4 million outstanding: A2/VMIG1 (LOC from PNC Bank); Baa1 underlying

-Series 2005: $6.1 million outstanding; Baa1

CONTACT

Mr. Larry Christman, Chief Financial Officer/Chief Operating Officer, (317) 776-7128

The last rating action with respect to Riverview was on May 7, 2009, when a municipal finance scale rating of Baa1 was assigned and affirmed and the outlook was stable. That rating was subsequently recalibrated to Baa1 on May 7, 2010.

The principal methodology used in this rating was Not-for-Profit Hospitals and Health Systems published in January 2008

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Analysts

Jennifer Ewing
Analyst
Public Finance Group
Moody's Investors Service

Beth I. Wexler
Backup Analyst
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

MOODY'S AFFIRMS RIVERVIEW HOSPITAL'S (IN) Baa1 BOND RATING; OUTLOOK REMAINS STABLE
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​
Global Footer | Moody's