Fitch Places Southeast Missouri Hospital Association (MO) Revs on Rating Watch Negative

CHICAGO--()--Fitch Ratings has placed the following bonds, currently rated 'BBB+', and issued by Cape Girardeau County Industrial Development Authority on behalf of Southeast Missouri Hospital Association (SEMO, d/b/a SoutheastHEALTH), on Rating Watch Negative:

--$93.9 million hospital revenue bonds, series 2007.

SEMO also has approximately $50 million in direct placement debt which Fitch does not rate.

SECURITY

The bonds are secured by a pledge of gross revenues, a first mortgage lien, and a debt service reserve fund.

KEY RATING DRIVERS

FINANCIAL PROFILE DECLINE: The Negative Watch reflects Fitch's concern over the deterioration in SEMO's financial performance in the unaudited fiscal 2013 (Dec. 31 year end) and through the three months ended March 31, 2014.

RATING SENSITIVITIES

RELEASE OF AUDIT: The fiscal 2013 audit is delayed and Fitch will resolve the Rating Watch when the audit is available and a management meeting is completed. Based on interim financial statements it appears a covenant violation is possible, which would likely result in negative rating pressure.

CREDIT PROFILE

Located in Cape Girardeau, MO (approximately 100 miles south of St. Louis), the SoutheastHEALTH (SEMO) system includes an acute care hospital with 230 staffed beds, three regional acute care facilities with a total of 94 staffed beds, home health, hospice, a new cancer center, and various other ambulatory sites and services across the Southeast Missouri region. In 2013 (unaudited), SEMO reported total revenues of $352 million.

CONTINUING DISCLOSURE

SEMO covenants to disclose annual audited financial statements within 120 days after the end of the fiscal year and quarterly financial and operating information within 90 days at the end of each quarter. SEMO disseminates this information including a balance sheet, income statement, cash flow statement and utilization statistics through the Municipal Securities Rulemaking Board EMMA website.

In addition, Fitch has withdrawn its ratings for the following Southeast Missouri Hospital Association (MO) bond due to prerefunding activity:

-- Cape Girardeau County Industrial Development Authority (MO) health facilities refunding revenue bonds, series 1993 (all maturities).

Additional information is available at 'www.fitchratings.com'

Applicable Criteria and Related Research:

'Nonprofit Hospitals and Health Systems Rating Criteria' (May 30, 2014)

Applicable Criteria and Related Research:

U.S. Nonprofit Hospitals and Health Systems Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=746860

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=835264

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Contacts

Fitch Ratings
Primary Analyst
Emily E. Wadhwani
Director
+1-312-368-3347
70 W. Madison Street, Chicago IL 60602
or
Secondary Analyst
Kathleen Proux
Analyst
+1-312-368-3348
or
Committee Chairperson
Emily Wong
Senior Director
+1-415-732-5620
or
Media Relations
Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Emily E. Wadhwani
Director
+1-312-368-3347
70 W. Madison Street, Chicago IL 60602
or
Secondary Analyst
Kathleen Proux
Analyst
+1-312-368-3348
or
Committee Chairperson
Emily Wong
Senior Director
+1-415-732-5620
or
Media Relations
Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com