NEW YORK (Standard & Poor's) Nov. 24, 2009--Standard & Poor's Ratings Services said today that it revised its outlook on Nashville, Tenn.-based HCA Inc. to positive from stable, and affirmed all ratings, including the 'B+' corporate credit rating.
"The outlook revision reflects the considerable turnaround in cash flow from 2008 and its demonstrated ability to refinance the now $14.5 billion of debt maturing in the years 2010 through 2014," said Standard & Poor's credit analyst David Lugg. Additionally, liquidity is adequate to repay the $1.9 billion of debt maturing in 2010 and 2011 without new financings.
The speculative-grade rating on HCA Inc. continues to reflect our concern that the largest U.S. owner and operator of acute health care facilities is particularly sensitive to reduced capacity utilization and pricing, by virtue of the significant debt leverage assumed in its November 2006 leveraged buyout (LBO).
While HCA has a large portfolio of 166 hospitals and 105 ambulatory surgery centers, we believe a concentration in several of its markets, highlight its strength, as well as its vulnerability. HCA enjoys relatively strong negotiating positions with private insurance companies in these markets, but also is susceptible to regional variations in demand, particularly in Florida and Texas.
We believe managed care price increases, which exceeded 6% in 2008, should average about the same amount in 2009. Through Sept. 30, 2009, these increases are between 6.0% and 6.5%. Still, the ongoing economic weakness within HCA's regions could magnify a slackening demand for elective procedures should it occur. Similarly, regional concentrations could amplify the effects of a national uptrend in the level of uncompensated care.
RELATED RESEARCH
"2008 Corporate Criteria: Analytical Methodology," April 15, 2008
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Media Contact:
David Wargin, New York (1) 212-438-1579, [email protected]
Analyst Contact:
David Lugg, New York (1) 212-438-7845
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