SIZABLE CAPITAL PLAN: Fitch believes that LPCH will need to maintain its current trend of profitability and cash flow generation to support its master facility plan.
Over the last decade, management has focused its efforts on developing and building its core service lines, including the development of its Child Health Research Institute -all designed to position LPCH as a preeminent pediatric academic medical center.
Historical profitability has been robust as LPCH benefited from increased demand, favorable rate increases, and a growing market footprint.
Capital spending has moderated over the last few years as LPCH has been preparing for its hospital expansion project, which has allowed for balance sheet growth.
Through FY2011, LPCH has spent approximately $140 million on project planning, design, and site acquisition, funded by $70 million in prior bond proceeds and $70 million in operating cash flow.
LPCH is currently in a capital campaign with a goal of raising $250 million for the project.
Fitch believes that LPCH will need to maintain its strong cash flow generation to buttress its balance sheet and preserve liquidity through the heavy capital spending period.
Post issuance of the fixed-rate series 2012A&B revenue bonds, LPCH will have $364.
While pro forma maximum annual debt service (MADS), as provided by LPCH and its agents, jumps to $22.
LPCH has liquidation procedures in place detailing the process by which internal funds would be liquidated to meet the tender obligations.
Additionally, LPCH plans to issue its series 2012B refunding bonds to refund its outstanding series 2003C bonds.