Fitch Ratings has affirmed the long- and short-term
ratings of 'AA', 'AA-' and 'F1+' to Ascension Health's $4 billion of
senior and subordinate bonds as listed below. The 'AA' rating applies
to all of Ascension's senior debt. The 'AA-' rating applies to the
subordinate bonds issued in 2005. The 'F1+' rating is based on certain
bank support and the internal liquidity of Ascension. The Rating
Outlook is Stable.
Ascension's ratings are supported by its geographic diversity, solid management practices, and strong and improving financial profile. Ascension Health posted a $414 million operating gain (including restructuring expenses of $53.1 million) in fiscal 2005, which equated to a 3.8% operating margin versus 1.9% in fiscal 2004. Exclusive of restructuring charges, Ascension's operating profit was $467.3 million, or 4.3%. Debt service coverage on senior and total debt was 6.8 times (x) and 5.6x, respectively, in fiscal 2005. Maximum annual debt service (including subordinate debt) as a percentage of revenue was a low 2.2%. Days cash on hand and cash to debt were 209.2 days and 130.7% (including both senior and subordinate debt) at fiscal 2005, respectively.
Through the six months ended Dec. 31, 2005, Ascension posted an operating profit of $214.2 million (3.8% operating margin) and debt service coverage on senior and total debt was 7.1x and 5.8x, respectively.
For those bonds supported by Ascension's internal liquidity, the 'F1+' rating is based on solid liquidity and cash flow and strong asset liability management practices. Ascension had approximately $520 million of unenhanced weekly variable-rate demand obligations (VRDOs) and $582 million of unenhanced annual VRDOs at Dec. 31, 2005. Ascension identifies $506 million (short-term fund) and $4.7 billion (long-term fund) of unrestricted cash and investments, all of which would be available in the unlikely event of an unremarketed put.
Ongoing concerns include future capital spending, and operating challenges in some markets. Ascension expects to spend between $1.3 billion and $1.4 billion per year on capital projects through 2011. This level of spending will require Ascension to maintain its operating performance at or above current levels and could limit liquidity growth over the short term. However, Fitch believes that Ascension's strong liquidity position, future system efficiencies, and its geographic diversity, should mitigate these risks over the medium to long term.
At December 2005, Ascension had 38 swaps outstanding for total notional amounts of $1.9 billion. The mark-to-market valuation of the swaps at December 2005 was negative $48 million. Given Ascension's strong liquidity position, cash flow, and management oversight of the program, Fitch believes the swaps pose minimal risk to the organization.
Ascension Health, the nation's largest not-for-profit Catholic health care system, had total operating revenue of $10.9 billion in fiscal 2005. The credit group consists of 32 health ministries, inclusive of 78 hospitals, in 20 states and the District of Columbia. In addition to a covenant to provide quarterly financial information, Ascension maintains a detailed web site, www.ascensionhealth.org, complete with up-to-date financial data. While Fitch does not receive forward-looking statements, management indicated that fiscal 2006 six-month performance is on plan. A more detailed report will be available within the next two weeks at Fitch's web site www.fitchratings.com.
Fitch affirms the following outstanding debt at 'AA' or 'AA/F1+' (par amounts represent initial issuance amounts):
-- $191,850,000 Escambia County Health Facilities Authority (Ascension Health Credit Group), series 2003A;
-- $525,400,000 Michigan State Hospital Finance Authority (Ascension Health Credit Group), series 2003B;
-- $295,375,000 Missouri Health and Education Facilities Authority (Ascension Health Credit Group), series 2003C;
-- $24,700,000 Idaho Health Facilities Authority (Ascension Health Credit Group), series 2003D;
-- $498,475,000 Indiana Health Facilities Financing Authority (Ascension Health Credit Group), series 2003E;
-- $49,300,000 Jacksonville Health Facilities Authority revenue bonds (Ascension Health Credit Group), series 2002A;
-- $47,205,000 Michigan State Hospital Finance Authority (Ascension Health Credit Group), series 2002B;
-- $41,105,000 Escambia County Health Facilities Authority (Ascension Health Credit Group), series 2002C;
-- $62,925,000 Wisconsin Health and Educational Facilities Authority auction-rate securities (Ascension Health Credit Group), series 2002D;
-- $37,000,000 Indiana Health Facilities Financing Authority auction-rate notes (Ascension Health Credit Group), series 2002E;
-- $100,825,000 Indiana Health Facilities Financing Authority revenue bonds (Ascension Health Credit Group), series 2002F;
-- $100,000,000 Indiana Health Facilities Financing Authority revenue bonds (Ascension Health Credit Group), series 2001A-1;
-- $100,000,000 Indiana Health Facilities Financing Authority revenue bonds (Ascension Health Credit Group), series 2001A-2;
-- $100,000,000 Indiana Health Facilities Financing Authority revenue bonds (Ascension Health Credit Group), series 2001A-3;
-- $100,800,000 Indiana Health Facilities Financing Authority revenue bonds (Ascension Health Credit Group), series 2001A-4;
-- $181,500,000 The Health and Educational Facilities Board of The Metropolitan Government of Nashville and Davidson County, Tennessee revenue bonds (Ascension Health Credit Group), series 2001B;
-- $29,300,000 Illinois Development Finance Authority variable-rate revenue bonds (St. Vincent de Paul Center Project), series 2000A;
-- $37,215,000 Puerto Rico Industrial, Tourist, Educational, Medical, and Environmental Control Facilities Financing Authority revenue bonds (Hospital De La Concepcion Project), series 2000A;
-- $127,000,000 Alabama Special Care Facilities Financing Authority of Mobile variable-rate revenue bonds (Ascension Health Credit Group), series 1999B;
-- $100,000,000 Alabama Special Care Facilities Financing Authority of Birmingham variable-rate revenue bonds (Ascension Health Credit Group), series 1999B;
-- $44,500,000 State of Connecticut Health and Educational Facilities Authority variable-rate revenue bonds (Ascension Health Credit Group), series 1999B;
-- $565,415,000 Michigan State Hospital Finance Authority revenue bonds (Ascension Health Credit Group), series 1999A (insured: MBIA);
-- $340,000,000 Michigan State Hospital Finance Authority variable-rate revenue bonds (Ascension Health Credit Group), series 1999B;
-- $16,865,000 City of Pottsville Hospital Authority revenue bonds (Ascension Health Credit Group), series 1999A (insured: Ambac);
-- $267,865,000 Travis County Health Facilities Development Corporation revenue bonds (Ascension Health Credit Group), series 1999A (insured: Ambac and MBIA);
-- $20,470,000 Waco Health Facilities Development Corporation revenue bonds (Ascension Health Credit Group), series 1999A;
-- $24,665,000 Maryland Health and Higher Educational Facilities Authority hospital revenue bonds (Charity Obligated Group), series 1999A;
-- $14,125,000 Schuylkill County Industrial Development Authority, Pennsylvania revenue bonds (Charity Obligated Group), series 1999A;
-- $100,000,000 Indiana Health Facilities Financing Authority (Ascension Health Credit Group) variable-rate revenue bonds, series 1999B;
-- $126,555,000 Indiana Health Facilities Financing Authority (Charity Obligated Group) revenue bonds, series 1999D.
The following bonds are affirmed at 'AA-' by Fitch (par amounts represent initial issuance amounts):
-- $10,000,000 Alabama Special Care Facilities Financing Authority of Birmingham Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-1;
-- $3,080,000 Alabama Special Care Facilities Financing Authority of Birmingham Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-2;
-- $47,590,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-3;
-- $15,530,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-4;
-- $37,725,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-5;
-- $28,215,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-6;
-- $56,285,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-7;
-- $56,025,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-8;
-- $37,305,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-9;
-- $37,200,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-10;
-- $18,650,000 Michigan State Hospital Finance Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-1;
-- $18,600,000 Michigan State Hospital Finance Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-2;
-- $55,900,000 Michigan State Hospital Finance Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-3;
-- $55,825,000 Michigan State Hospital Finance Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-4.
The following bonds are affirmed at 'AA-/F1+' (the short-term rating is based on the internal liquidity of Ascension):
-- $67,415,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-1;
-- $66,890,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-2.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Ascension's ratings are supported by its geographic diversity, solid management practices, and strong and improving financial profile. Ascension Health posted a $414 million operating gain (including restructuring expenses of $53.1 million) in fiscal 2005, which equated to a 3.8% operating margin versus 1.9% in fiscal 2004. Exclusive of restructuring charges, Ascension's operating profit was $467.3 million, or 4.3%. Debt service coverage on senior and total debt was 6.8 times (x) and 5.6x, respectively, in fiscal 2005. Maximum annual debt service (including subordinate debt) as a percentage of revenue was a low 2.2%. Days cash on hand and cash to debt were 209.2 days and 130.7% (including both senior and subordinate debt) at fiscal 2005, respectively.
Through the six months ended Dec. 31, 2005, Ascension posted an operating profit of $214.2 million (3.8% operating margin) and debt service coverage on senior and total debt was 7.1x and 5.8x, respectively.
For those bonds supported by Ascension's internal liquidity, the 'F1+' rating is based on solid liquidity and cash flow and strong asset liability management practices. Ascension had approximately $520 million of unenhanced weekly variable-rate demand obligations (VRDOs) and $582 million of unenhanced annual VRDOs at Dec. 31, 2005. Ascension identifies $506 million (short-term fund) and $4.7 billion (long-term fund) of unrestricted cash and investments, all of which would be available in the unlikely event of an unremarketed put.
Ongoing concerns include future capital spending, and operating challenges in some markets. Ascension expects to spend between $1.3 billion and $1.4 billion per year on capital projects through 2011. This level of spending will require Ascension to maintain its operating performance at or above current levels and could limit liquidity growth over the short term. However, Fitch believes that Ascension's strong liquidity position, future system efficiencies, and its geographic diversity, should mitigate these risks over the medium to long term.
At December 2005, Ascension had 38 swaps outstanding for total notional amounts of $1.9 billion. The mark-to-market valuation of the swaps at December 2005 was negative $48 million. Given Ascension's strong liquidity position, cash flow, and management oversight of the program, Fitch believes the swaps pose minimal risk to the organization.
Ascension Health, the nation's largest not-for-profit Catholic health care system, had total operating revenue of $10.9 billion in fiscal 2005. The credit group consists of 32 health ministries, inclusive of 78 hospitals, in 20 states and the District of Columbia. In addition to a covenant to provide quarterly financial information, Ascension maintains a detailed web site, www.ascensionhealth.org, complete with up-to-date financial data. While Fitch does not receive forward-looking statements, management indicated that fiscal 2006 six-month performance is on plan. A more detailed report will be available within the next two weeks at Fitch's web site www.fitchratings.com.
Fitch affirms the following outstanding debt at 'AA' or 'AA/F1+' (par amounts represent initial issuance amounts):
-- $191,850,000 Escambia County Health Facilities Authority (Ascension Health Credit Group), series 2003A;
-- $525,400,000 Michigan State Hospital Finance Authority (Ascension Health Credit Group), series 2003B;
-- $295,375,000 Missouri Health and Education Facilities Authority (Ascension Health Credit Group), series 2003C;
-- $24,700,000 Idaho Health Facilities Authority (Ascension Health Credit Group), series 2003D;
-- $498,475,000 Indiana Health Facilities Financing Authority (Ascension Health Credit Group), series 2003E;
-- $49,300,000 Jacksonville Health Facilities Authority revenue bonds (Ascension Health Credit Group), series 2002A;
-- $47,205,000 Michigan State Hospital Finance Authority (Ascension Health Credit Group), series 2002B;
-- $41,105,000 Escambia County Health Facilities Authority (Ascension Health Credit Group), series 2002C;
-- $62,925,000 Wisconsin Health and Educational Facilities Authority auction-rate securities (Ascension Health Credit Group), series 2002D;
-- $37,000,000 Indiana Health Facilities Financing Authority auction-rate notes (Ascension Health Credit Group), series 2002E;
-- $100,825,000 Indiana Health Facilities Financing Authority revenue bonds (Ascension Health Credit Group), series 2002F;
-- $100,000,000 Indiana Health Facilities Financing Authority revenue bonds (Ascension Health Credit Group), series 2001A-1;
-- $100,000,000 Indiana Health Facilities Financing Authority revenue bonds (Ascension Health Credit Group), series 2001A-2;
-- $100,000,000 Indiana Health Facilities Financing Authority revenue bonds (Ascension Health Credit Group), series 2001A-3;
-- $100,800,000 Indiana Health Facilities Financing Authority revenue bonds (Ascension Health Credit Group), series 2001A-4;
-- $181,500,000 The Health and Educational Facilities Board of The Metropolitan Government of Nashville and Davidson County, Tennessee revenue bonds (Ascension Health Credit Group), series 2001B;
-- $29,300,000 Illinois Development Finance Authority variable-rate revenue bonds (St. Vincent de Paul Center Project), series 2000A;
-- $37,215,000 Puerto Rico Industrial, Tourist, Educational, Medical, and Environmental Control Facilities Financing Authority revenue bonds (Hospital De La Concepcion Project), series 2000A;
-- $127,000,000 Alabama Special Care Facilities Financing Authority of Mobile variable-rate revenue bonds (Ascension Health Credit Group), series 1999B;
-- $100,000,000 Alabama Special Care Facilities Financing Authority of Birmingham variable-rate revenue bonds (Ascension Health Credit Group), series 1999B;
-- $44,500,000 State of Connecticut Health and Educational Facilities Authority variable-rate revenue bonds (Ascension Health Credit Group), series 1999B;
-- $565,415,000 Michigan State Hospital Finance Authority revenue bonds (Ascension Health Credit Group), series 1999A (insured: MBIA);
-- $340,000,000 Michigan State Hospital Finance Authority variable-rate revenue bonds (Ascension Health Credit Group), series 1999B;
-- $16,865,000 City of Pottsville Hospital Authority revenue bonds (Ascension Health Credit Group), series 1999A (insured: Ambac);
-- $267,865,000 Travis County Health Facilities Development Corporation revenue bonds (Ascension Health Credit Group), series 1999A (insured: Ambac and MBIA);
-- $20,470,000 Waco Health Facilities Development Corporation revenue bonds (Ascension Health Credit Group), series 1999A;
-- $24,665,000 Maryland Health and Higher Educational Facilities Authority hospital revenue bonds (Charity Obligated Group), series 1999A;
-- $14,125,000 Schuylkill County Industrial Development Authority, Pennsylvania revenue bonds (Charity Obligated Group), series 1999A;
-- $100,000,000 Indiana Health Facilities Financing Authority (Ascension Health Credit Group) variable-rate revenue bonds, series 1999B;
-- $126,555,000 Indiana Health Facilities Financing Authority (Charity Obligated Group) revenue bonds, series 1999D.
The following bonds are affirmed at 'AA-' by Fitch (par amounts represent initial issuance amounts):
-- $10,000,000 Alabama Special Care Facilities Financing Authority of Birmingham Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-1;
-- $3,080,000 Alabama Special Care Facilities Financing Authority of Birmingham Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-2;
-- $47,590,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-3;
-- $15,530,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-4;
-- $37,725,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-5;
-- $28,215,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-6;
-- $56,285,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-7;
-- $56,025,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-8;
-- $37,305,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-9;
-- $37,200,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-10;
-- $18,650,000 Michigan State Hospital Finance Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-1;
-- $18,600,000 Michigan State Hospital Finance Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-2;
-- $55,900,000 Michigan State Hospital Finance Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-3;
-- $55,825,000 Michigan State Hospital Finance Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-4.
The following bonds are affirmed at 'AA-/F1+' (the short-term rating is based on the internal liquidity of Ascension):
-- $67,415,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-1;
-- $66,890,000 Indiana Health Facility Financing Authority Revenue Bonds (Ascension Health Subordinate Credit Group) series 2005A-2.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.