Fitch Ratings has upgraded the unsecured debt of Nashville, Tenn.-based Hospital Corp. of America to "BB-" from "B+" following a strong first six months of the 2013 fiscal year.
Fitch also bumped up HCA's outlook from stable to positive and affirmed HCA's issuer default rating at "B+". HCA has roughly $28.2 billion of outstanding debt.
Fitch analysts said HCA has "improved its balance flexibility" by extending the maturity dates of several debt obligations due this year and in 2016. HCA also recorded $462 million of cash on hand, giving it significant leverage to expand and cover other debt.
Of all the major for-profit hospital companies, HCA is in the best position to benefit from the Patient Protection and Affordable Care Act, Fitch analysts added. HCA, currently the largest operator with 161 hospitals, has had stronger organic revenue growth than other hospital operators since the beginning of 2012, and HCA's massive presence in several markets will continue to help boost patient volumes.
However, Fitch noted that almost half of HCA's revenue comes from its hospitals in Florida and Texas — states that are not likely to expand Medicaid next year — which could hurt the company's bottom line.
HCA's net income in the second quarter, ended June 30, rose 8.2 percent to $423 million, and it was one of the few for-profit hospital operators to report a rise in admissions and surgeries. In the first half of 2013, HCA's profit totaled $767 million.
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