Score Motion: Moody’s affirms Lee Memorial Well being System’s (FL) A2; secure outlook
New York, August 19, 2020 — Moody’s Buyers Service has affirmed Lee Memorial Well being System’s (FL) (LMHS) A2 income bond ranking. This motion impacts roughly $514 million of rated debt. The outlook stays secure.
Affirmation of A2 displays the expectation that working outcomes will return to sturdy historic ranges in 2021 following decrease efficiency in 2020 as a result of coronavirus pandemic. LMHS is experiencing a quicker restoration in income and volumes than anticipated since resuming electives Could four and even with a spike in instances in July. A return to sturdy and sturdy monetary efficiency shall be pushed by greater inpatient and surgical volumes following not too long ago accomplished capital initiatives, improved reimbursement and better acuity. Liquidity will enhance (even after compensation of superior Medicare funding) following the completion of a giant capital cycle in 2021 and the issuance of two non-public financial institution placements to reimburse prior capital expenditures. That mentioned, the extra debt represents an 18% improve in monetary leverage (29% over two years) though LMHS will deleverage following the upcoming maturity of a number of loans. Favorably, LMHS will proceed to take care of its dominant market share inside Lee County regardless of the sundown of Certificates of Want regulation within the state of Florida. A for-profit supplier owns land within the service space however so far no progress has been made on any competing inpatient facility.
Probably the most speedy social danger is the influence of COVID-19, which continues to drive decrease efficiency. Although volumes have largely returned since LMHS resumed non-essential procedures, they continue to be under pre-COVID ranges and COVID constructive instances have elevated within the service space. The continuing unfold of the pandemic creates uncertainty about volumes and CARES Act funding obtained will solely partially offset losses. We regard the coronavirus outbreak as a social danger below our ESG framework, given the substantial implications for public well being and security.
The secure outlook anticipates a return to sturdy historic efficiency in 2021 supported by a stronger than anticipated restoration from the pandemic, good development developments and excessive acuity. Sizable CARES Act funding will offset a lot of the misplaced income and better expense incurred in 2020 although efficiency shall be under funds. Liquidity will proceed to enhance as capital expenditures normalize and not too long ago accomplished initiatives drive affected person quantity development.
-Sustained enchancment and development in liquidity following the compensation of superior Medicare funds
All excellent bonds are secured by a joint and several other gross income pledge of the obligated group comprised of LMHS excluding: Trauma, Residence Well being, Healthpark Care Heart, Greatest Care Assurance, LLC, Greatest Care Collaborative, LLC,, Greatest Care Companions, Inc., Florida Radiology Leasing, LLC, Lee Group Healthcare, Inc and the Basis. The obligated group generated greater than 95% of the system’s income and comprised greater than 95% of the system’s property in fiscal 2019.
Lee Memorial Well being System (LMHS) is a big public well being system organized as an unbiased particular district below the legal guidelines of Florida. The system is positioned within the southwestern a part of the state alongside the gulf coast. With headquarters in Fort Myers, the overwhelming majority of the system’s amenities and affected person entry factors are positioned inside Lee County. LMHS consists of six hospitals positioned on 4 campuses together with Lee Memorial Hospital (Cleveland), HealthPark Medical Heart, Gulf Coast Medical Heart, Cape Coral Hospital and the 2 specialty hospitals, Golisano Youngsters’s Hospital of Southwest Florida and the Rehab Hospital. The system additionally consists of a big employed doctor group, rehabilitation companies, a talented nursing facility and a rising outpatient presence highlighted by a big ambulatory facility in Coconut Level which opened in December 2018. LMHS generated income of $2 billion in fiscal 2019.
The principal methodology utilized in these rankings was Not-For-Revenue Healthcare printed in December 2018 and obtainable at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1154632. Alternatively, please see the Score Methodologies web page on www.moodys.com for a duplicate of this technique.
For additional specification of Moody’s key ranking assumptions and sensitivity evaluation, see the sections Methodology Assumptions and Sensitivity to Assumptions within the disclosure kind. Moody’s Score Symbols and Definitions might be discovered at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For rankings issued on a program, sequence, class/class of debt or safety this announcement gives sure regulatory disclosures in relation to every ranking of a subsequently issued bond or word of the identical sequence, class/class of debt, safety or pursuant to a program for which the rankings are derived solely from present rankings in accordance with Moody’s ranking practices. For rankings issued on a help supplier, this announcement gives sure regulatory disclosures in relation to the credit standing motion on the help supplier and in relation to every specific credit standing motion for securities that derive their credit score rankings from the help supplier’s credit standing. For provisional rankings, this announcement gives sure regulatory disclosures in relation to the provisional ranking assigned, and in relation to a definitive ranking which may be assigned subsequent to the ultimate issuance of the debt, in every case the place the transaction construction and phrases haven’t modified previous to the task of the definitive ranking in a fashion that will have affected the ranking. For additional data please see the rankings tab on the issuer/entity web page for the respective issuer on www.moodys.com.
Regulatory disclosures contained on this press launch apply to the credit standing and, if relevant, the associated ranking outlook or ranking evaluation.
Moody’s normal ideas for assessing environmental, social and governance (ESG) dangers in our credit score evaluation might be discovered at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.
Please see www.moodys.com for any updates on adjustments to the lead ranking analyst and to the Moody’s authorized entity that has issued the ranking.
Please see the rankings tab on the issuer/entity web page on www.moodys.com for extra regulatory disclosures for every credit standing.
Safat Hannan Lead Analyst PF Healthcare Moody's Buyers Service, Inc. 7 World Commerce Heart 250 Greenwich Avenue New York 10007 US JOURNALISTS: 1 212 553 0376 Consumer Service: 1 212 553 1653 Lisa Goldstein Extra Contact PF Healthcare JOURNALISTS: 1 212 553 0376 Consumer Service: 1 212 553 1653 Releasing Workplace: Moody's Buyers Service, Inc. 250 Greenwich Avenue New York, NY 10007 U.S.A JOURNALISTS: 1 212 553 0376 Consumer Service: 1 212 553 1653
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