NEW YORK--(BUSINESS WIRE)--Fitch Ratings has placed the following bonds, currently rated 'CCC' by Fitch, issued by the Rhode Island Health and Educational Building Corporation on behalf of St. Joseph Health Services of Rhode Island (SJHS) on Rating Watch Positive:
--$17.8 million, series 1999.
The bonds are secured by a pledge of SJHS gross receipts, real estate, and debt service reserve fund.
KEY RATING DRIVERS
RATING WATCH POSITIVE: The Rating Watch Positive reflects the recently signed joint-venture letter of intent (LOI) agreement between SJHS, through its parent CharterCARE Health Partners (CCHP), and Prospect Medical Holdings (PMH), a for-profit California healthcare company that owns and operates several facilities in California and Texas. As part of the agreement, PMH intends to redeem all of SJHS' outstanding debt upon finalizing the joint-venture. Fitch expects the joint-venture to be finalized between both organizations over the next 6-9 months.
WEAK FINANCIAL PROFILE: SJHS' financial profile continues to be characterized by operating losses, extremely low liquidity, and weak debt service coverage. However, debt service payments continue to be paid on time.
WEAK SERVICE AREA CHARACTERISTICS: Located in North Providence, Rhode Island, SJHS' service area is challenged by high unemployment, stagnant population growth, and below-average wealth indicators.
LIGHT DEBT BURDEN: SJHS has a relatively light debt burden as maximum annual debt service (MADS; $2 million) represented 1.4% of total annualized revenues through the January 2013 interim period (four months; unaudited).
POSITIVE RATING MOVEMENT: Fitch would view positively the completed joint-venture agreement between CCHP and PMH.
SJHS is located in Rhode Island. The organization operates a 359-bed acute care general hospital and integrated network of primary care and specialty clinics. In fiscal 2012, SJHS had $153.5 million in total revenue. SJHS covenants only to disclose annual audited financial information to EMMA. SJHS has a very conservative debt profile with 100% fixed rate bonds and no outstanding swaps.
For more information, please see Fitch's last press release 'Fitch Affirms St. Joseph Health Services of Rhode Island Revs at 'CCC', dated Oct. 3, 2012.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Revenue-Supported Rating Criteria' (June 12, 2012);
--'Nonprofit Hospitals and Health Systems Rating Criteria'(July 23, 2012).
For information on Build America Bonds, visit 'www.fitchratings.com/BABs'.
Applicable Criteria and Related Research
Revenue-Supported Rating Criteria
Nonprofit Hospitals and Health Systems Rating Criteria