HCA gets "positive" rating from S&P, stays speculative grade

S&P has issued a "positive" outlook rating for giant hospital operator HCA Inc., revising its rating from a previous "stable." S&P said that the new outlook reflects the company's big cash flow turnaround from last year, and its "demonstrated" ability to refinance its whopping $14.5 billion in debt.

While S&P admits that HCA could face a crunch time between 2010 and 2012. Still, on the whole the credit ratings agency thinks HCA can handle the debt without having to refinance again. The company will see $14.5 billion in debt mature between '10 and '14, and  $1.2 billion of debt which will mature in 2010 and 2011.

At the same time, though, the firm continues to rate HCA debt at B+. The ratings firm argues that given this debt load created by its November 2006 leveraged buyout, HCA is still vulnerable to changes in patient volume and pricing pressures.

Meanwhile, analysts fret that HCA's concentrations in certain markets could be both a weakness and a strength. On the one hand, they note, the market power it enjoys gives it a big stick in regional negotiations with health plans. At the same token, this market concentration leaves the company vulnerable if these key regions see fluctuations in demand, especially in key states like Florida and Texas, they say.

To learn more about HCA's position:
- read this S&P press release
- read this Reuters piece

Related Articles:
HCA net income climbs dramatically for Q3 '09
Moody's rates HCA's planned $750M debt offering at Ba3
HCA closes $1.5B bond offering

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