Bond Covenants
Hospitals often seek independent valuations when preparing to raise capital for major projects such as expansions, renovations, or new service lines. These pivotal decisions must align with existing bond covenants, including debt service coverage requirements, additional indebtedness tests, and restrictions on asset transfers. A defensible valuation gives hospital leadership, trustees, and bondholders the confidence that new financing can be pursued responsibly and in full compliance with covenant obligations.
Why Valuation Matters in Bond Covenant Compliance
Bond covenants require hospitals to maintain specific financial ratios, protect asset values, and demonstrate the ability to support additional debt. A defensible valuation provides the foundation for these calculations, ensuring that debt service coverage, leverage, and liquidity metrics are based on accurate and supportable assumptions. Without this clarity, hospitals risk covenant breaches or delays in securing new financing
Common Capital Events Requiring Valuation:
• New construction and major renovations
• Service line expansions
• Mergers, affiliations, and joint ventures
• Physician practice acquisitions
• Asset sales or divestitures
• Debt restructuring or refinancing.
Why Hospitals Choose Independent Valuation Specialists
Hospitals facing capital expansion, debt restructuring, or covenant-sensitive transactions rely on independent valuation specialists to ensure objectivity, regulatory defensibility, and credibility with trustees and rating agencies. A well-supported valuation protects the organization’s financial integrity, strengthens its credit position, and ensures that capital projects move forward with confidence.
Some Additional Topics You May Want to Visit:
Healthcare Feasibility Studies
Independent valuation when the stakes are high.
Valuation as the Gateway to Raising New Capital
When hospitals pursue major projects—new towers, ED expansions, service line growth, or replacement facilities—lenders and bondholders require a clear demonstration of financial strength. Valuation validates the hospital’s asset base, projected cash flow, and the expected performance of new or expanded services. This documentation becomes essential for rating agencies, trustees, and boards evaluating whether the organization can responsibly take on additional capital.
What Makes a Valuation “Appropriate” for Bond Covenants and Capital Financing
Well‑supported valuation protects the hospital’s financial integrity, strengthens its credit position, and ensures that capital projects move forward with confidence. When the stakes include covenant compliance, rating agency review, and long‑term financial stability, independent valuation becomes an essential part of responsible governance.
Support Your Capital Plan with a Defensible Valuation
If your hospital is preparing for a major capital event or needs to validate covenant compliance, we provide independent, healthcare-specific valuations that meet the highest standards of defensibility and clarity.