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For the second time in just two months, Community Medical Centers has received an improved financial rating that cites strong clinical services and stellar management among other attributes as a case for the upgrade.
Moody's Investors Service (Moody’s) announced the upgraded ratings on Community’s revenue bonds from Baa2 to Baa1 on March 19.
According to Moody’s March 19 report, supporting the rating are a number of strong credit fundamentals, including a large revenue base, good market position and strong clinical services.
The upgrade to Baa1 is driven by:
• Improving balance sheet ratios
• The completion of the vast majority of the organization's large capital plan
• The maintenance of adequate operating performance
• The likely receipt of additional provider fee dollars
The Moody’s upgrade follows Standard & Poor’s February 2014 upgrade of Community’s rating from BBB/Stable to BBB/Positive at a time when other nonprofit hospitals across the nation are being downgraded. This is a long-term rating/outlook on the hospital’s revenue bonds. The improved outlook is a significant benefit to Community’s long-term financial leverage.
The Moody’s report also states Community has a strong management team, which was responsible for the significant turn-around executed last decade, and for the improvements that have taken place following the downturn in 2010.
Strengths cited in the Moody’s report included Community’s large size and dominant market position in central California.
Community has maintained an improved liquidity position over the last three years despite reinvesting millions into capital improvement projects.
The Moody’s report stated the stable outlook at the higher rating level reflects its view that Community will continue to achieve stable, adequate operating performance and will build additional cash.
Mary Lisa Russell reported this story. She can be reached at MedWatchToday@CommunityMedical.org.