The ratings agency also affirmed CentraCare's 'AA-' rating on $402 million of revenue bonds issued by the City of St. Cloud on behalf of the provider organization.
Fitch Ratings revised its outlook for CentraCare Health from 'Negative' to 'Stable,' the company announced Friday afternoon.
Fitch stated that CentraCare's issuer default rating of 'AA-' reflects the organization's "distinctly leading market position" over its service area.
Additionally, Fitch stated that the integrated health system based in St. Cloud will sustain "strong capital-related ratios despite the coronavirus pandemic in the context of the system's midrange revenue defensibility and strong operating risk profile assessments."
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The ratings agency also affirmed its 'AA-' rating on $402 million of revenue bonds issued by the City of St. Cloud on behalf of the provider organization.
"The Outlook revision to Stable from Negative reflects CentraCare's better than previously expected operating margins in fiscal 2020 and strong margins through six-months fiscal 2021," the report stated. "The system's forward-looking capital-related ratios are stronger than the previous scenario analysis indicated when the Outlook was revised to Negative in April 2020. Additionally, CentraCare has demonstrated an ability to manage through the challenges of the pandemic and as vaccines are being deployed, there is much more operating certainty in the current environment than there was last year. Fundamentally, Fitch believes CentraCare's operating platform will remain strong."
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Fitch stated that CentraCare's capital spending is moderate in fiscal year 2021 and that the system could generate an operating EBITDA margin "consistent with a strong operating risk assessment" in the long-term.
Earlier this week, Fitch released a report indicating that the $1.9 trillion American Rescue Plan would improve revenues and reduce cost pressures on nonprofit hospitals.
Related: Fitch: American Rescue Plan Helps Nonprofit Hospitals
Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.