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When the Detroit Lions selected Johnson number two overall, Mel Kiper, Jr. Calvin Johnson was by far the most talked about rookie of the 2007 NFL Draft Class before the season began. Fitch RatingsMichael Burger, +1-212-908-0555 (New York)Anthony Houston, +1-312-368-3180 (Chicago)Cindy Stoller, +1-212-908-0526(Media Relations, New York)Copyright Business Wire 2009. Fitch's code ofconduct, confidentiality, conflicts of interest, affiliate firewall, complianceand other relevant policies and procedures are also available from the 'Code ofConduct' section of this site. Fitch's rating definitions and the terms of use of such ratings are available onthe agency's public site, Published ratings, criteria andmethodologies are available from this site, at all times. Rex covenants to provide annual disclosureto the Nationally Recognized Municipal Securities Information Repositories(NRMSIRs) as well as quarterly statistics, which Fitch views favorably.
Rex's total revenue in fiscal 2008 was approximately $486 million Rex hasno outstanding interest rate swaps. Rex is a controlled affiliate ofUNCHCS, which operates a 739-bed academic medical center located in Chapel Hill,NC. Rex operates a 433-licensed bed acute care tertiary hospital and two nursingcare facilities with a total of 227 beds. As Rex continues to expand its marketposition, Fitch believes patient volume trends will continue to increase,ultimately supporting Rex's operational stability. The Stable Outlook reflects Fitch's expectation that Rex will continue toperform at recent levels of profitability. Rex has a somewhat high average age of plant of12.6 years, but this concern is mitigated by recent strategic projects focusingon ambulatory centers.
Rex's liquidity metrics are mixed for the rating categoryas days cash on hand and cushion ratio are below Fitch's median figures, whilecash to debt compares favorably. As of March 31, 2009 (unaudited)Rex had approximately $128.7 million in unrestricted cash and investments, whichequated to 100.5 days cash on hand, a 7.4 times (x) cushion ratio, and a cash todebt ratio of 146.6%. Rex competes with both health care organizations for patientvolumes as well as key service-line physicians. With a market share of 40%, Rex and UNCHCS are theleading providers as compared to the two other area health care competitors,WakeMed Health System with an approximate 35% market share (rated 'AA-' byFitch) and Duke University Health System with an approximate 15% market share(rated 'AA'). Key rating drivers include Rex's competitive marketplace, mixed liquidityindicators, somewhat high average age of plant, and light debt service coveragefor the rating category. Further, management indicates that volumes continue to bestrong for Rex as inpatient discharges, newborn births, outpatient surgeries,and emergency room visits all increased in fiscal 2008 from fiscal 2007. Management attributes the positiveprofitability to strong patient volumes coupled with strategically implementedexpense controls.
As ofMarch 31, 2009 (nine-months through fiscal 2009), Rex was ahead of its budgetand generated a 3.8% operating margin. Over the past three fiscal years, Rex has demonstrated its profitability byaveraging a 3.0% operating margin and a 9.1% operating EBITDA margin. The mostsignificant benefit of the affiliation has been UNCHCS' negotiation of Rex'smanaged care contracts and improved supply chain management through jointpurchasing, which Fitch views favorably. UNCHCS controls the majority of seats on the Rex board of trustees,approves the annual operating budget, and approves any debt plans. Additionally, Rex remains independently obligated on itsdebt. Since the merger in 2000, Rexcontinues to operate as a separate, not-for-profit entity and retains itsseparate identity.
Theprimary credit strength is Rex's status as a controlled affiliate of UNCHCS,which is owned by the State of North Carolina. The 'A+' rating affirmation is supported by Rex's relationship with theUniversity of North Carolina Health Care System (UNCHCS), solid operatingprofitability, strong utilization trends, and light leverage indicators. The bondsare insured by Ambac Assurance Corp., which is not rated by Fitch The RatingOutlook is Stable. NEW YORK--(Business Wire)--Fitch Ratings has affirmed its unenhanced long-term 'A+' rating on theapproximately $101 million North Carolina Medical Care Commission hospitalrevenue bonds series 1998, issued on behalf of Rex Healthcare (Rex). The text of thisMoody's Investor Service rating is available at Bonds | Global Markets Bonds Global Markets.