Samaritan Health Services, OR Bond Rating Outlook Revised To Stable From Negative On Improved Operating Performance

CHICAGO (S&P Global Ratings) March 24, 2020--S&P Global Ratings revised its outlook to stable from negative and affirmed its 'BBB+' long-term rating on the Oregon Facilities Authority's (OFA) series 2016A and series 2010A bonds, issued on behalf of Samaritan Health Services (SHS). At the same time, S&P Global Ratings assigned its 'BBB+' long-term rating to the OFA's $69.425 million series 2020A tax-exempt refunding bonds and $3.0 million series 2020B taxable refunding bonds, both issued on behalf of SHS.
"The revised outlook reflects SHS' modestly improved operating performance in fiscal 2019, generating healthy maximum annual debt service coverage. SHS' management team has successfully implemented a robust series of operational improvement initiatives over the last two years, and has targeted further savings and revenue growth projects in fiscal 2020 and beyond," said S&P Global Ratings credit analyst Allison Bretz. "We believe this strategy will support ongoing improvement in SHS' underlying operating results over the outlook period."
The current COVID-19 pandemic continues to be a rapidly changing situation, and we believe the pandemic will likely result in disruption to the acute-care sector across the country, although the duration and severity remain unclear. We continue to update our view as we better understand the broader impact of this pandemic to the acute-care sector. We believe the pandemic, and the resulting economic challenges, will likely pressure profitability and unrestricted reserves; however, the timing and extent of that strain remain uncertain. We believe SHS has the capacity to absorb some strain on its financial metrics, but a more prolonged or severe stress could cause us to revise that view.
Proceeds from the series 2020 bonds will be used to refund SHS' series 2010A bonds, and a portion of SHS' series 2016A bonds.
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