Moody's Investors Service has affirmed the "Baa2" rating assigned to Scottsbluff, Neb.-based Regional West Medical Center's bonds, affecting approximately $20 million of rated debt.
Here are three things to know about the rating action and the medical center's outlook.
1. The rating affirmation is supported by a number of factors, including Regional West's strong market share as the largest hospital and only provider of higher acuity services across a broad service area, relatively stable balance sheet metrics, and sizeable cash distributions from a joint venture investment that bolster debt service coverage metrics, according to Moody's.
2. The medical center's strengths are offset by inconsistent financial performance including several consecutive years with operating cash flow margins below 5 percent, and low capital spending in recent years, that while maintaining balance sheet strength, "suggests the need for higher spending in the future."
3. Regional West's outlook is stable, which Moody's said reflects several factors including operating performance improvement over the last six months, low leverage on a direct and comprehensive debt basis, very strong market share, essentiality of service in the hospital's service area and cash distributions from Regional West's investment in Loveland, Colo.-based Medical Center of the Rockies.
More articles on healthcare finance:
Why volume vs. value is a faulty equation