CHICAGO - Standard & Poor's has bumped Howard Young Health Care Inc. firmly into the single-A category with a two-notch upgrade in recognition of its strong financials and its parent's relationship with Ascension Health Alliance last year.
The agency at the same time raised the rating on Howard Young's parent, Ministry Health Care Inc., also by two levels to AA.
The rating agency Oct. 1 upgraded Howard Young two notches to A from BBB-plus. The action impacts 2012 debt sold for the Howard Young Medical Center through the Wisconsin Health and Educational Facilities Authority. The outlook is stable.
Standard & Poor's raised the system's stand-alone rating to A-minus to reflect "the obligated group's small admission base but sound historical operating performance, solid debt service coverage, and good balance sheet, coupled with recent growth in unrestricted reserves."
The further one-notch lift to A reflects one notch of group support following the consolidation of Howard Young's parent organization, Ministry Health Care, with Ascension Health Alliance in April 2013.
"The stable outlook reflects our view of HYHC's healthy operating performance and continued improvement in balance sheet metrics, which we believe supports the current rating and offsets HYHC's limited size and net patient revenue base," said Standard & Poor's analyst Avani Parikh.
"Barring an explicit guarantee from the parent, we do not expect to raise the rating within the outlook period given the inherent risks associated with small hospitals," Parikh added.
HYHC is made up the Howard Young hospital in Woodruff, Wis., and Eagle River Memorial Hospital in Eagle River, Wis.
The rating agency also on Oct. 1 raised its underlying rating on Ministry's Health Care's 2004, 2010, and 2012 bonds to AA from A-plus. The debt sold through WHEFA. The outlook is stable.
"The rating action reflects our A-plus stand-alone credit rating profile for Ministry, which reflects Ministry's contribution to affiliate Ascension Health Alliance's solid market share in Wisconsin, continued solid operations, good balance sheet, and the application of our group rating methodology," said analyst Suzie Desai.
