1. What is Pine Creek Healthcare Capital?

Pine Creek Healthcare Capital, Inc., a subsidiary of Raymond James Financial, is a financial firm focused exclusively on providing tax-exempt and taxable capital to rural and Critical Access Hospitals and other healthcare facilities across America.

Pine Creek is well-known by rural health and hospital organizations, including the Rural Health Resource Center, the National Cooperative of Health Networks, the Centers for Medicare & Medicaid Services, the State Offices of Rural Health and Flex Coordinators.

We work with financial advisors, investment bankers, brokers and commercial financial institutions to create the best financing options for health facilities.

2. Who is Pine Creek and what healthcare experience does Pine Creek bring to the arena of capital financing solutions?

Pine Creek is a national healthcare financier who provides direct lending, investment banking and underwriting services. Our team’s experience extends from hospital bankers to hospital operators to healthcare policy makers. This diverse group represents multiple perspectives giving us a broad knowledge base to better understand the specific capital needs of the health facility borrower and how to finance them.

• Access – Pine Creek provides immediate and easy access to capital through an efficient and cost-effective process specifically tailored to the hospital’s creditworthiness. However, accessing federal lending programs can be arduous and is significantly limited by the federal budget.
• Price – Pine Creek will price at the current taxable or tax-exempt market interest rate based on the individual hospital borrower’s credit. Pine Creek’s all-in transaction costs are lower than the HUD/FHA 242, the USDA Loan Guarantee Program, non rated bonds and typical private placements.
• Commitment – Pine Creek issues a Commitment Letter to the health facility prior to the health facility being bound to finance with Pine Creek. This enormous advantage provides the health facility with the comfort of knowing their interest rate, amount of debt, financing terms and funding date prior to incurring significant expenses.
• Expertise – The Pine Creek team has unsurpassed expertise in rural hospital credit underwriting, Medicaid and Medicare reimbursement processes, and ongoing review and research regarding changes in healthcare policy which impact hospitals.
• Service – Pine Creek offers a fast and efficient lending process, and we believe our commitment to customer service and satisfaction is first-class.

3. How does Pine Creek differ from other capital providers?

We are the only investment bank we know of that commits our own capital to provide cost-effective, easily accessible, dedicated capital. Generally we are more cost-effective than other financing alternatives.

• We offer rural hospitals the most complete array of investment banking services in the marketplace. Plus, we are the only full-service investment banker in the rural marketplace that has committed its own capital for rural healthcare lending.
• Pine Creek will lend at a higher multiple of cash flow than other lenders. That additional leverage is worth a tremendous amount of interest rate savings.
• We can lend directly at a fixed rate without the added costs of mortgage insurance, guarantees, letters of credit, swaps or rating agency fees.
• Pine Creek utilizes standardized documents and a streamlined due diligence process, which results in a fast and efficient transaction at a reduced cost for the health facility client.
• Therefore, Pine Creek financings are priced at a market interest rate but they have transaction costs which are much less than the HUD/FHA 242 program, the USDA Loan Guarantee program or a typical private placement.

4. How does Pine Creek compare to other financing alternatives as far as cost?

Due to Pine Creek’s lower financing cost structure, proprietary credit methodology and market-based interest rate, the total effective interest rate for a Pine Creek financing is equal to or less than other financing options, with the sole exception of the federal USDA Direct Loan program.

Although the federal HUD/FHA 242 program advertises a lower base interest rate than commercial products, the associated fees and costs of the HUD/FHA 242 program result in a higher effective borrowing rate than the indicated base rate, especially for financings of $25 million or less.

Moreover, the inherent delays associated with working through federal loan programs can result in lost revenues and opportunity costs due to longer loan processing timeframes. These delays can expose the hospital to interest rate risk which may significantly compound the overall cost of the financing.

5. How can Pine Creek help me validate my creditworthiness to third-party entities?

• Pine Creek’s due diligence team is made of up of rural healthcare personnel including health facility managers who especially understand the financial and operational risks of rural hospitals. As a result, Pine Creek is uniquely qualified to structure financings that reflect the strengths of each individual hospital.
• Regardless of whether you are rated or unrated hospital, Pine Creek can structure a financing to meet your capital needs and risk tolerance.

6. Generally, what financing terms can I expect?

• Financing Amount – $3 million and up.
• Term – 10 to 25 years, subject to the life of the related assets.
• Amortization – 10 to 30 years.
• Timing – Financing may be closed within 45 days based upon the chosen financing option.
• Interest Rate – Based on current market pricing and borrower’s credit.
• Credit Enhancements – Dependent on hospital’s credit and financing structure, not necessarily a requirement.
• Debt Service Reserve Fund – Equal to 12 months’ principal, and interest is required at closing. Financing the Debt Service Reserve Fund may be included with the project financing and may be applied to principal repayments at the end of the financing term.
• Security – A pledge of revenues and applicable assets as allowed by local law.

7. How do we start working with Pine Creek?

Pine Creek utilizes a simple four-page document, called a prequalification form that collects all of the vital information we need to begin to analyze the credit specifics of your entity. This completed form, in conjunction with a set of your most recently audited financial statements for the last three years is all we need. All information that you submit will be held in strict confidence. Completing this form does not in any way obligate you to work with Pine Creek.

The prequalification form is available on line at pchcapital.net.

Once we receive your completed prequalification form, we can deliver a customized financing proposal (pending due diligence) to you.

8. What financial covenants and other ongoing monitoring procedures and reporting requirements can I expect after the financing closing?

The Pine Creek managed financings include typical financial covenants and are specific to each individual hospital and whether or not the issue is a public or private placement transaction. These include:

• Minimum Days Cash on Hand
• Maximum Days in A/R
• Maximum Days in A/P
• Current Ratio
• Debt Service Coverage Ratio