Fitch Ratings has upgraded the rating on approximately $17.8 million in fixed rate bonds issued by the North Carolina Medical Care Commission on behalf of Albemarle, N.C.-based Stanly Memorial Hospital Project from "BBB+" to "A."
Fitch has also revised the rating outlook for Stanly Health Services from positive to stable. The upgrade was partly driven by SHS's improved balance sheet metrics during the past year. As of June 30, growth in unrestricted cash and investments and a low and declining debt burden resulted in favorable metrics for the system, according to Fitch. Furthermore, last July, Charlotte, N.C.-based Carolinas HealthCare System acquired SHS and agreed to invest $70 million in capital support.
Still, SHS showed weak profitability in fiscal year 2013, primarily because of an increase in bad debt from 9 percent of patient service revenue in 2009 to 15 percent last year. Weaker patient volumes also caused a drop in patient service revenue, which led to a drop in SHS's operating margin from 1.8 percent in 2012 to negative 2.4 percent in 2013, according to Fitch.