Moody's Affirms Palisades Medical Center's Ba2 Bond Rating; Outlook Revised To Positive From Stable

Moody's Investors Service has affirmed Palisades Medical Center's (PMC) Ba2 bond rating. PMC's outlook was also revised to "positive" from "stable."

The affirmation of the Ba2 debt rating and the revision of the outlook to "positive" from "stable" reflect PMC's trend of improving financial performance in fiscal years 2011 and 2010 with volume growth and operational improvements at the Medical Center driving strong revenue growth and good cash flow generation.

PMC's positive outlook reflects Moody's expectation that improved financial performance at the Medical Center will be sustained in FY 2012 and FY 2013. Moody's also forecasts that PMC's improved cash flow generation should provide adequate debt service coverage and further improve its balance sheet metrics.

"We are extremely pleased that Moody's Investors Service has affirmed Palisades Medical Center's bond rating and acknowledged a positive financial outlook for our organization," said John Calandriello, Chief Financial Officer of Palisades Medical Center. "We applaud our physicians, skilled nurses, and devoted staff for helping Palisades Medical Center become the health care provider of choice in northern Hudson and southeastern Bergen Counties."

The following are excerpts from the ratings narrative from Moody's Investors Service:

  • PMC continues trend of improving financial performance in fiscal year (FY) 2011 with operating cash flow margin of 6.3% compared to 5.1% and 4.7% in fiscal years 2010 and 2009, respectively
  • PMC's good cash flow generation in FY 2011 improves debt coverage ratios to levels favorable to the Ba medians with Moody's adjusted maximum annual debt service coverage (MADS)
  • PMC has seen growth in combined inpatient admissions and observation stays and outpatient volumes in FY 2011 over the prior year driving 4.7% total operating revenue growth; growth continues in FY 2012 maintaining the Medical Center's leading market share in its immediate eight-town primary service area
  • All fixed rate debt structure with no derivates mitigates any immediate demands on the PMC balance sheet
  • Clinical affiliation with Hackensack University Medical Center for level two nursery services, other possible alliances being negotiated and a new residency program viewed as differentiating factors that improve the quality and the reputation of the hospital in the eyes of patients and physicians

The principal methodology used by Moody's Investors Service in this rating was its Not-For-Profit Healthcare Rating Methodology published in March 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

About Palisades Medical Center

Palisades Medical Center is located in North Bergen, NJ, and serves a population of 400,000 in Hudson and Southern Bergen Counties. The non-profit Medical Center features a 202-bed hospital and The Harborage, a 245-bed nursing home and rehabilitation center. Palisades is the largest employer in its service area with more than 1,300 employees and it has an annual operating budget of approximately $150 million.

The State of New Jersey's annual healthcare report card ranked Palisades as one of the top hospitals in the state and #1 in Hudson County. Palisades was also one of only two hospitals in New Jersey to receive a perfect 100% score in treating heart attack patients. The State's annual evaluation showed that The Harborage at Palisades has "Zero Deficiencies" for the third consecutive year. For more information, please call (201) 854-5000 or visit www.palisadesmedical.org.

About Moody's Investors Service

Moody's Investors Service is a leading provider of credit ratings, research, and risk analysis. Moody's commitment and expertise contributes to transparent and integrated financial markets. The firm's ratings and analysis track debt covering more than 110 countries, 11,000 corporate issuers, 22,000 public finance issuers, and 94,000 structured finance obligations.