Allina Health System has gotten that most fortunate of grades--an A+--from credit scoring agency Fitch Ratings, boosted by strong performances on a number of key financial metrics, along with a "stable" ratings outlook. And actually, when you look at the overview provided by Fitch, it's a wonder Allina's financial performance isn't getting more attention on its own. (As we note elsewhere, Wall Street seems to be agog over Tenet Healthcare's performance, which doesn't seem to hold a candle to Allina's, but that's another story.)
Fitch has assigned the rating to $415.5 million City of Minneapolis, Minn., and the Housing and Redevelopment Authority of the City of St. Paul Health Care System Revenue Bonds, along with variable rate revenue bonds through the same entities, series 2009B and 2009C. At the same time, Fitch has upgraded its A rating to A+ on $640.1 million of bonds issued for Allina through the City and the Housing and Redevelopment Authority.
Why is Fitch so jazzed about Allina? Well for one thing, if it's not the only game in town, it's pretty darn close, with a leading 32.4 percent inpatient market share in the competitive Minneapolis-St. Paul metro area as of March 31. Allina's liquidity position is extremely strong too, with 115 days cash on hand, and 123 percent coverage of long-term debt. That equates to $814.1 million of unrestricted cash and investments on hand, but annual debt service of only $45.8 million to cover. Consider any of several other extremely strong indicators, including EBITDA of 10.8 percent for the six months ended June 30--a number that includes $45 million annual average losses on its non-obligated entities--and you've got some extremely sexy figures.
What's not to like? Well, Fitch does have some concerns about Allina's investment strategy, which includes $420 million in alternative investment classes that can't be made immediately liquid and bear somewhat more risk. On the other hand, it does have $394 million in short-term investments that are highly liquid, so hey, even that's not much of a quibble. Go Allina!
To learn more about Allina's ratings:
- read this Fitch release
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