HVHS has a solid and relatively stable 58% inpatient market share in its primary service area with its closest competitor holding a 7.4% share.
Competitive pressures and a slight fall off in patient activity in 2017 present challenges for HVHS going forward.
HVHS's primary service area encompasses a 50 mile radius and accounts for approximately 85% of hospital discharges.
HVHS operating performance in fiscal 2017 was pressured with the operating margin falling to 1.3% from 3.3% in 2016.
HVHS's capital plans call for an average of approximately $35 million in spending per year through fiscal 2022.
HVHS has consistently maintained a substantial liquidity cushion, successfully preserving large cash balances even during recent periods of increased operating pressure.
Fitch's base case scenario reflects HVHS's budget for fiscal 2018, projection for fiscal 2019, and HVHS's five year CAGR thereafter.
The rating case, which applies Fitch's standard stress over the five-year period, demonstrates the strength of HVHS's financial profile as key liquidity and leverage metrics remain strong and in line with the 'AA' rating category throughout the entire cycle.
HVHS has a defined benefit retirement plan that was frozen as of 2006.