Lee Memorial Health System earns upgraded bond rating
Lee Memorial Health System’s bond rating has been upgraded from A3 to A2.
The rating upgrade reflects “two years of significant improvement to operating profitability, driven in part by strong growth in volume trends,” according to Moody’s, the leading bond rating service.
“Our upgraded bond rating is a reflection of hard work on the part of the entire Lee Memorial Health System team and our commitment to providing the best in patient care while remaining fiscally responsible,” said Mike German, Lee Memorial Health System chief financial officer. “An A2 rating signals to investors we are a positive investment and potentially opens the door to new buyers of our bonds and ultimately, increased capital for reinvestment in our community.”
Moody’s issued the upgraded rating after reviewing and reaffirming a bond issued in April 2010. Other strengths identified by Moody’s are:
Fiscal Year 2010 marked a second consecutive year of improved operating profitability for Lee Memorial Health System with $37.1 million in operating income (3.0 percent margin) consistent with the $36.4 million in operating income (3.1 percent margin) in fiscal year 2009, compared to only $3.1 million (0.3 percent margin) reported in fiscal year 2008.
Cash flow generation was comparatively strong with 10.3 percent and 10.6 percent margins in fiscal year 2010 and fiscal year 2009, respectively, versus 7.3 percent margin in fiscal year 2008.
The System has a healthy liquidity position as evidenced by $468.8 million of unrestricted cash and investments (151 days cash on hand) as of September 30, 2010, up from $443.5 million (152 days cash on hand) as of September 30, 2009.
Favorable volume trends during fiscal year 2010, with nearly 6 percent growth in inpatient admissions, 3.3 percent increase in outpatient visits and 5 percent growth in emergency room visits.
Lee Memorial Health System has maintained its strong 95 percent market share in Lee County following its acquisition of two HCA facilities, Southwest Florida Regional Hospital and Gulf Coast Hospital, in 2007.
Financial upgrades are not common in the current economic environment locally or nationally according to German, further marking the significance of an upgrade at this time.