CHICAGO & NEW YORK--(BUSINESS WIRE)--Fitch Ratings has upgraded the underlying rating on Reid Hospital and Healthcare Services, Indiana's (Reid) approximately $175 million outstanding revenue bonds (Hospital Authority of Richmond, Reid Hospital Project), series 2005A-C to 'AA-' from 'A+'. The series 2005A-C outstanding debt is insured by Financial Security Assurance, Inc. (FSA), whose insurer financial strength is rated 'AAA' by Fitch Ratings. The Rating Outlook is Stable.The 'AA-' rating upgrade is supported by Reid's dominant market position, strong financial profile, solid management practices, and successful progress in constructing its replacement facility. Reid maintains a leading market share of 83% in its primary service area (PSA) and is the only hospital in its PSA with no other hospital having more than a 5% market position in Wayne County, the principle county in its PSA. As of Dec. 31, 2007, Reid's unrestricted cash and investments measured approximately $317.6 million (unaudited), which equates into 598 days cash on hand, a cushion ration of nearly 40 times (x), and cash to debt of 175.8%. These indicators measured above Fitch's 'AA' category medians.
Furthermore, Reid's operating ratios and debt service coverage levels compare positively against Fitch's 'AA' category medians. More specifically, Reid's operating margin, excess margin, and EBITDA margin of 5.3%, 14.6%, and 18.0% are above the 'AA' median marks of 4.1%, 7.2%, and 14.1%, respectively, through December 31, 2007. Maximum annual debt service coverage (MADS) and debt to capitalization was 5.9x and 27.9% in 2007, which measured favorably against the Fitch 'AA' category median of 5.6x and 32.8%, respectively.
Management anticipates construction completion of its replacement facility by the end of June 2008 with full move-in being accomplished by September 2008. Currently, the new facility is 75% occupied with the inpatient care portion being the single remaining phase yet to relocate. With the construction of the replacement facility, Reid's average age of plant is 7.8 years and compares favorably against Fitch's 'AA' medians of 9.5 years.
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