Fitch Places St. Joseph Health Services of Rhode Island Revs on Rating Watch Positive

NEW YORK--()--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.

SECURITY

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).

RATING SENSITIVITY

POSITIVE RATING MOVEMENT: Fitch would view positively the completed joint-venture agreement between CCHP and PMH.

CREDIT PROFILE

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

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=681015

Nonprofit Hospitals and Health Systems Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=683418

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Michael Burger, +1-212-908-0555
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Gary Sokolow, +1-212-908-9186
Director
or
Committee Chairperson
Jim LeBuhn, +1-312-368-2059
Senior Director
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Michael Burger, +1-212-908-0555
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Gary Sokolow, +1-212-908-9186
Director
or
Committee Chairperson
Jim LeBuhn, +1-312-368-2059
Senior Director
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com