Fitch Ratings on Thursday upgraded its issuer default rating on Health Management Associates Inc. by one notch, citing an improvement in the company's earnings and debt load since 2008.
The rating of BB-, up from B+, applies to about $3 billion in debt, and Fitch said its outlook was stable, revised from positive when the rating was lower.
Weak operating trends expected to last through 2011 keep the rating still three levels below investment grade, Fitch said.
But the company's ratio of debt to earnings before interest, taxes, depreciation and amortization fell to around 4 at the end of 2010 from about 5.4 after a leveraged capitalization in 2007, Fitch said, and the company's liquidity is solid with $230 million in free cash flow in 2010.
Fitch said it expects Health Management Associates to continue to prioritize acquisitions rather than paying down debt, given the pressure on hospital providers to improve operating results.