Moody's Investors Service affirms Central Georgia Health System Obligated Group's (doing business as Navicent Health (Navicent)) Aa3 long-term rating on $80.8 million of outstanding revenue certificates issued through the Macon-Bibb County Hospital Authority. The rating outlook is revised to stable from negative. 

SUMMARY RATING RATIONALE

The revision of the rating outlook to stable is supported by Navicent's materially improved operating performance in FY 2014. We expect the improved results to be sustained at a level appropriate compared to rating category peers given management's continued performance improvement strategies. 

The Aa3 rating reflects Navicent's position as a regional tertiary referral center and largest acute care provider in the broad service area with a leading market position, improved operating results in FY 2014, very strong and growing liquidity, and above average debt service coverage. Furthermore, the system's management team continues to focus on implementing a strategic plan aimed at positioning the system for the future growth. 

OUTLOOK

The revision of the outlook to stable is based on Navicent's materially improved operating performance in FY 2014 and the expectation of its sustainability given the system's market share and management's strategies to maintain the improved performance.

WHAT COULD MAKE THE RATING GO UP

• Material enterprise growth while reporting and sustaining double-digit operating cash flow margins

• Maintenance of strong debt coverage ratios and balance sheet measures 

WHAT COULD MAKE THE RATING GO DOWN

• Failure to sustain recent performance improvement

• Material weakening of liquidity ratios

• An increase in debt that stresses debt coverage measures 

OBLIGOR PROFILE

Navicent includes two-acute care hospitals (The Medical Center, Navicent Health a 637-bed acute care tertiary referral hospital located in Macon, GA and The Medical Center of Peach County, Navicent Health a 25-bed critical access hospital) and a number of affiliates.

LEGAL SECURITY

The certificates are secured by a pledge of the gross revenues of the obligated group. The obligated group includes: the parent; the Medical Center of Central Georgia (dba The Medical Center, Navicent Health); Health Services of Central Georgia, Inc., (dba Health Services, Navicent Health) which operates physician offices and clinics; and Medcen Community Health Foundation, Inc. (dba Medcen Community Health Foundation, Navicent Health).