Standard & Poor’s Ratings Services recently affirmed its A+ underlying and long-term rating for Santa Clara County’s 2008 revenue bonds issued for El Camino Hospital.
S&P also affirmed its A+ underlying rating and AAA/A-1+ long-term joint criteria rating on the county’s series 2009A variable rate demand bonds, noting that the outlook for the hospital’s overall long-term debt of $332 million is stable.
“This favorable rating reflects El Camino Hospital’s commitment over the past few years to improving our operating performance and efficiencies,” said Michael King, chief financial officer of El Camino Hospital. “We are pleased to continue delivering high-quality care to our community while maintaining financial strength within a competitive marketplace.”
According to S&P, the ratings reflect the following key factors.
• Strong operations, with a $60 million operating surplus for fiscal year 2012, representing a 10.1 percent operating margin.
• Improved operating liquidity, with unrestricted cash and investments of $599 million as of May 31, representing 360 days’ cash on hand, which S&P considers strong.
• Low leverage of 25 percent total long-term debt to capitalization as of May 31 and limited capital needs.
• Solid economic fundamentals in the operating environment with above-average income indicators.
Additionally, S&P considers the hospital’s affiliation with the Palo Alto Medical Foundation to be beneficial, given the focus on enhancing clinical programs, coordinating risk sharing and developing joint, regionwide strategic plans.