Cullman Regional Gets Strong Wall Street Upgrade

by | Jan 2, 2018 | Breaking News, Business, County News, Cullman

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Cullman Regional Gets Strong Wall Street Upgrade

Moody’s Investors Service has upgraded Cullman Regional Medical Center (CRMC) revenue bonds issued through the Health Care Authority of Cullman County to Baa3 from Ba1.

The upgrade to Baa3 affects approximately $59 million of debt. The outlook remains stable at the higher rating level.

MOODY’S RATINGS RATIONALE
The upgrade to Baa3 reflects Moody’s expectation that CRMC will continue to generate strong margins and add unrestricted cash to the balance sheet, continuing a multi-year improvement in leverage and liquidity metrics.

Additionally, the upgrade to Baa3 reflects the system’s favorable market position and strong management team. Offsetting these strengths are the system’s large debt burden, size and scope of operations, and limited opportunities for material growth.

RATING OUTLOOK
The stable outlook at the higher rating level incorporates our view that Cullman will continue to improve debt metrics driven by regular debt service payments and no plans for additional borrowing. Additionally, Moody’s expect the system will be able to continue to build its balance sheet and maintain strong operating performance to support the unfavorable leverage.

FACTORS THAT COULD LEAD TO AN UPGRADE
• Material enterprise growth and geographic diversification
• Significant reduction in leverage and growth of liquidity

FACTORS THAT COULD LEAD TO A DOWNGRADE
• Increase in debt
• Inability to maintain operating cash flow to support high debt burden
• Deterioration of liquidity
• Erosion in market share resulting in constrained utilization metrics

LEGAL SECURITY
The bonds are secured by a revenue pledge (as defined in the bond documents) of the Obligated Group, which consists of Cullman Regional Medical Center (an Alabama nonprofit corporation and a 501(c)(3) organization) and the Health Care Authority of Cullman County, and a mortgage on the land and buildings.

Cullman Regional Medical Center is a small, 145 bed and $115 million in revenue hospital located in the county and city of Cullman. CRMC is a blended component unit of the Authority which is component unit of Cullman County, Alabama. CRMC is a level III trauma center and operates a cardiac center.

Cullman Regional

Cullman Regional Gets Strong Wall Street Upgrade

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The staff writers at Cullman Today are a collaborative group of citizen reporters sharing the writing of stories based upon their personal interests and work schedules.

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