Moody’s Investors Service recently assigned Akron Children’s Hospital an investment grade rating of A1, with a stable outlook on its now existing $117.7 million of outstanding debt.
While the grade remained unchanged, Moody’s revised the outlook to stable from negative based on Akron Children’s notably improved operating performance in 2009 and maintenance of solid liquidity and debt coverage measures.
“We continue to work on strengthening Children’s clinical reputation and those efforts are paying off,” said Bill Considine, president and CEO of Akron Children’s Hospital. “We’ve been able to recruit nationally recognized pediatric specialists and add clinical services the children and families in our region need.”
Among the strengths noted by Moody’s is Akron Children’s leading market presence as a stand-alone children’s hospital, with 62 percent market share in a seven-county primary service area.
The hospital system’s strong volume growth is largely associated with the opening of a pediatric hospital in Boardman, Ohio, in December 2008 and the leasing and operating of the neonatal special care nursery at St. Elizabeth Health Center in Youngstown. Other factors include a continued focus on physician recruitment, partnerships with regional adult hospitals for pediatric services, and a focus on productivity and efficiencies to manage expense growth.
In 2009, Akron Children’s operating income improved from 2008 with a 1.4 percent margin or $6.2 million, and its operating cash flow grew by 29 percent to $39.2 million. Akron Children’s also experienced good revenue growth in both 2008 and 2009 of 11 percent and 13 percent, respectively.
Moody’s noted a few challenges faced by Akron Children’s, including the ongoing risks of managing a high and increased Medicaid population; weak volume trends in the first quarter of 2010 due to a light flu season; declining population growth; and increased competitive pressures in fringe service areas.
Akron Children’s plans on investing an estimated $31 million in capital expenditures in 2010.
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