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FITCH PLACES MUNROE REGIONAL HEALTH SYSTEM'S (FL) REVS ON RATING WATCH EVOLVING


Fitch Ratings-New York-09 May 2013: Fitch Ratings has placed the following bonds issued by
Marion County Hospital District on behalf of Munroe Regional Health System (MRHS) on Rating
Watch Evolving:

--$60.2 million series 2007 'A-'.

SECURITY
The bonds are secured by MRHS' gross revenues.

KEY RATING DRIVERS
RATING WATCH EVOLVING: The Rating Watch Evolving reflects the ongoing negotiations
between MRHS and Health Management Associates (HMA; rated 'BB-'/Outlook Stable by Fitch) to
become a part of HMA. If the transaction is completed, HMA is expected to provide sizable capital
investment in MRHS, and all of MRHS' outstanding debt will be retired prior to or at closing.
MRHS expects to sign a letter of intent (LOI) and expects to finalize the transaction within the next
six months.

DECLINE IN OPERATING PROFITABILITY: In fiscal 2012 (Sept. 30; audited) MRHS recorded
a $4.8 million operating loss, which resulted in a negative 1.7% operating margin and 5% operating
EBITDA margin. This is down from fiscal 2011's 1.5% operating margin and 7.9% operating
EBITDA margin and compares negatively against Fitch's 'A' category medians. Management
attributes the profitability decline to softened volumes coupled with higher observation stays,
increased amount of Medicare paying patients accessing the facility, and state Medicaid
reimbursement cuts.

LEADING MARKET POSITION: MRHS has the leading market position in its primary service
area of approximately 55%. Fitch views MRHS' leading market share as a primary credit strength.
STABLE LIQUIDITY POSITION: Six-months through fiscal 2013 (March 31, 2013; unaudited)
MRHS had unrestricted cash and investments totaling $122.2 million, which equated to 152 days
cash on hand, 19.1x cushion ratio, and 145% cash to debt. These metrics are relatively stable from
the prior year and remain adequate for the rating level.

RATING SENSITIVITY
POTENTIAL RATING MOVEMENT: Based upon the final outcome of the proposed transaction
between MRHS and HMA, the rating could be raised, affirmed, or lowered. Fitch would view
positively the completed affiliation between MRHS and HMA as an overall enhancement to the
credit profile of MRHS. However, continued losses from operations and mounting capital funding
needs could lead to negative rating pressure over the medium term.

CREDIT PROFILE
Munroe Regional Health System's primary business is the operation of a 421-bed acute care
hospital in Ocala, Florida, which is located approximately 72 miles northwest of Orlando. MRHS
currently leases the hospital from Marion County Hospital District, but does not receive any tax
revenues to support operations. However, management intends to cancel lease upon signing a
definitive agreement with HMA. In fiscal 2012, MRHS had total revenues of approximately $294.1
million.

For more information, please see 'Fitch Affirms Munroe Regional Health System's (FL) Revs at
'A-'; Outlook Stable, dated May 11, 2011.

Contact:
Primary Analyst
Michael Burger
Director
+1-212-908-0555
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004

Secondary Analyst
Adam Kates
Director
+1-312-368-3180

Committee Chairperson
Jim LeBuhn
Senior Director
+1-312-368-2059

Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email:
elizabeth.fogerty@fitchratings.com.

Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Revenue-Supported Rating Criteria' (June 12, 2012);
--'Nonprofit Hospitals and Health Systems Rating Criteria' (July 23, 2012).
For information on Build America Bonds, visit 'www.fitchratings.com/BABs'.

Applicable Criteria and Related Research
Revenue-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=681015
Nonprofit Hospitals and Health Systems Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=683418
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