September 4, 2012 / 5:07 PM / 7 years ago

TEXT-S&P comments on HealthPartners combining with Park Nicollet

(The following statement was released by the rating agency)

Sept 4 - Standard & Poor’s Ratings Services said today that the announcement by HealthPartners Inc. (BBB+/Positive/—) and Park Nicollet Health Services (A/Stable/—) that their boards of directors have signed an agreement to combine their organizations does not affect Standard & Poor’s ratings on HealthPartners. Although the agreement calls for a combining of the two entities’ boards of directors, the obligated groups securing the debt of both organizations are not expected to change. The combined entity will retain the HealthPartners name, with Mary Brainerd—HealthPartners’ president and CEO—becoming CEO of the new entity, and David Abelson, MD—president and CEO of Park Nicollet—heading the combined organization’s care delivery system, which will be named the Park Nicollet HealthPartners Care Group. Pending state and federal regulatory review, the agreement is expected to be effective Jan. 1, 2013. We believe that combining the two entities augments each entity’s business position because both entities operate in complementary markets. We also believe that the increased scale of the combined entity should provide opportunities for realizing cost efficiencies and implementing strategies that better position the organization for health care reform. Potential operational risk exists within the process of ultimately integrating the two practitioner groups, and it remains to be seen how smoothly that process will be executed. We do not expect any immediate financial implications but will meet with each organization in the near term to better understand the combined strategy and potential enterprise and financial impacts. The positive outlook on HealthPartners reflects its sustained strong earnings. If the company is able to at least maintain its current level of membership while continuing to generate annual returns on revenue of about 3%, and maintain EBITDA fixed-charge coverage of more than 5x, we could raise the ratings by one notch within the next 12 months. We don’t expect a significant increase in financial leverage, and statutory capitalization will likely remain strong. (Caryn Trokie, New York Ratings Unit)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below