S&P upgrades Prime Healthcare's rating

Standard & Poor's has upgraded the corporate rating assigned to Ontario, Calif.-based Prime Healthcare Services to "B+" from "B."

S&P also raised its rating on Prime's senior secured term loan from "B" to "B+" and raised its recovery rating on this debt from "4" to "3."

The rating upgrade follows "several quarters of better-than-expected operating results, characterized by high-teens EBITDA margins that reflect a faster-than-expected operating turnaround of recently acquired hospitals," S&P credit analyst Shannan Murphy said. It also comes after Prime's withdrawal of its bid to acquire Daughters of Charity Health System, a six-hospital network based in Los Altos, Calif.

S&P analysts expect Prime to remain acquisitive. However, they expect Prime will quickly raise margins at acquired properties, resulting in leverage sustained in the mid- to high 3x range over time.

"Prime Healthcare is committed to providing sustainable, quality healthcare in every community it serves," Prem Reddy, MD, chairman, president and CEO of Prime Healthcare Services, said in a statement. "We are proud to have been upgraded by S&P and look forward to continuing to provide excellence in care, financial stability and significant investments at each of our hospitals."

 

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