CHICAGO – (Business Wire) Fitch Ratings has assigned an underlying ‘A-’ rating to approximately $110 million County of Hancock, Ohio, hospital facilities revenue bonds series 2004. the bonds are insured by Assured Guaranty Municipal Corp. (formerly FSA) and supported by a standby bond purchase agreement with Fifth third Bank (rated ‘A-’, with a Negative Outlook by Fitch).

the Rating Outlook is Stable.

the ‘A-’ rating reflects Blanchard Valley Health System’s (BVHS) leading market position, consistent operating profitability, moderately high debt burden, and a strong base of local physicians. Blanchard Valley Regional Health Center (BVRHC), the hospital component of BVHS, offers a full range of inpatient and outpatient health care services at the system’s two facilities in Findlay and Bluffton, OH. BVRHC is the only acute care provider in its primary service area consisting of Hancock County and portions of the surrounding counties, with a dominant market share of 76.5% based on most recent data available. Management’s primary strategic initiative is to promote a market environment that encourages collaborative relationships among local physicians, employers, and hospitals. the system has a history of strong operating profitability with average operating margins of 4.7% since 2005. for the nine-month interim period ending September 2009, the system generated a 3.3% operating margin ($5.9 million), which is consistent with the prior year’s 3.4% operating margin ($8.1 million). BVHS’s historical profitability compares favorably to Fitch’s 2009 ‘A’ rated median of 2.7%.

Credit concerns include BVHS’s debt structure, which is approximately 88% variable-rate for the obligated group, a moderately aggressive investment policy, and moderately high debt burden. Investment income declined significantly in fiscal 2008 and for the nine-month interim period 2009, with BVHS posting realized losses of $1.3 million and $2.5 million, respectively. BVHS’s debt load is moderately high. the debt-to-capitalization ratio of 61.7% at Dec. 31, 2008 compares unfavorably to the ‘A’ rated median of 40.3%. Maximum annual debt service (MADS) of $9.1 million (which includes an additional $1 million in possible support payments to a non-obligated entity) represents 3.8% of 2008 revenues compared to the median of 3.1%. As a result, coverage of MADS by Operating EBITDA was a somewhat light 3.2 times (x) in 2008 and 2.9x through the interim period. BVHS’s debt burden is mitigated by BVHS’s leading market share, healthy cash flow, and strong liquidity. the system had 252.1 days of cash on hand and a 15.3% cushion ratio at the nine-month interim ending Sept. 30, which are above Fitch’s medians for the category of 171.2 days of cash, and 13.3x cushion ratio.

the Stable Rating Outlook reflects Fitch’s expectation that BVHS will maintain strong liquidity indicators and operating performance in line with Fitch’s ‘A’ rated medians. It is Fitch’s expectation that BVHS will continue moderate capital spending with no near- to medium-term needs to secure additional debt.

BVHS is the corporate parent of an integrated health care delivery system consisting of Blanchard Valley Regional Health Center (BVRHC), operating two acute care hospitals with total of 175 beds in service in Findlay, and Bluffton, OH; Blanchard Valley Continuing Care Services; Blanchard Valley Medical Practices, LLP and Blanchard Valley Health Foundation (BVHF). Only BVHS, BVRHC and BVHF are in the obligated group. the main 150-bed campus is located in Findlay and the second 25-bed campus is located approximately 20 miles southwest in Bluffton. Total operating revenue for BVHS in fiscal 2008 was $239 million. the obligated group comprises 83.4% ($345.7 million) of the total assets and 80.3% ($192.3 million) of the total revenues of the consolidated group.

BVHS covenants to disclose annual and quarterly results, including both financial and operating data to the Municipal Securities Rulemaking Board (MSRB) via the Electronic Municipal Market Access (EMMA). BVHS also provides management discussion and analysis with quarterly results.

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