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New Hampshire Health & Educ. Fac. Auth. -- Moody's affirms Exeter Hospital's (NH) Baa2; stable outlook

·12 min read

Rating Action: Moody's affirms Exeter Hospital's (NH) Baa2; stable outlookGlobal Credit Research - 25 Feb 2021New York, February 25, 2021 -- Moody's Investors Service has affirmed the Baa2 on Exeter Hospital's (NH) revenue bonds issued through the New Hampshire Health and Education Facilities Authority affecting $48 million of debt outstanding. The outlook is stable.RATINGS RATIONALEAffirmation of the Baa2 reflects Exeter Hospital's low financial leverage, solid balance sheet metrics and market leading position in the demographically favorable seacoast region of New Hampshire. Exeter will have manageable capital needs in the near term, preserving liquidity, though it will continue to invest in build out of its ambulatory network. Absent additional CARES Act grant funds, operating performance will continue to be modest and variable driven by large losses at the employed physician group. The pandemic will also continue to unfavorably impact patient volumes in fiscal 2021 as operations normalize. Though the market leader, Exeter does have a modest revenue base and will continue to operate in a low growth service area with both for-profit and not-for-profit competition. And, while providers in the state are rapidly consolidating, Exeter's plan to affiliate with a large health system recently ended, placing on hold more capital-intensive growth strategies. Liquidity remains solid though Exeter maintains somewhat high exposure to equity investments and growth in liquidity will be constrained due to modest operating cash flows.RATING OUTLOOKThe stable outlook reflects Moody's expectation that Exeter Hospital will achieve its fiscal 2021 operating budget and maintain solid liquidity levels. Excluding additional external grants, failure to achieve 2021 operating budget may pressure the rating or outlook.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS- Sustained improvement in operating performance- Sizable organic enterprise growth- Maintenance of favorable liquidity and leverage positionsFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS- Failure to achieve 2021 operating budget excluding grants- Material decrease in liquidity or significant increase in financial leverage- Inability to notably grow revenue base in a rapidly consolidating stateLEGAL SECURITYBonds are secured by a first security interest in gross receipts and a mortgage lien on property, plant, and equipment of the obligated group which includes Exeter Hospital and Exeter Healthcare. Financial covenants include: 1) 1.25 times debt service coverage, event of default if failure continues for four consecutive fiscal quarters or falls below 1.0 times; 2) 1.0 times cash to debt; and 3) 100 days cash on hand. The employed physician group losses are excluded from covenant calculations.PROFILEExeter Health Resources, Inc. and Subsidiaries includes 100-bed Exeter Hospital, Exeter Healthcare, Inc. (sub-acute and long-term care), Core Physicians, LLC (an employed physician group), Exeter Med Real, Inc. (an owner of real estate), and Rockingham Visiting Nurse Association and Hospice. The system is based in Rockingham County, NH and generated $366 million of operating revenue in fiscal 2020.METHODOLOGYThe principal methodology used in these ratings was Not-For-Profit Healthcare published in December 2018 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1154632. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Safat Hannan Lead Analyst PF Healthcare Moody's Investors Service, Inc. 7 World Trade Center 250 Greenwich Street New York 10007 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Beth Wexler Additional Contact PF Healthcare JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 © 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. 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