Citrus Hospital Squeezed

Moody’s Investors Service placed the Baa3 rating it assigns to Citrus Memorial Hospital’s debt on watch for possible downgrade last week.

The action applies to $41.2 million of Series 2002 bonds rated by Moody’s. It follows receipt of the hospital’s unaudited fiscal 2010 financial statements, which show that “operating income declined to a material loss of $6.2 million,” according to the agency. Moody’s noted that the negative 3.6% operating margin compares to a $5.2 million, or 2.8%, operating margin in fiscal 2009.

Total revenue declined in fiscal 2010 following a 63% reduction in tax revenue and a 6% decline in admissions, according analysts.

Moody’s expects to complete a review of the credit in 90 days and determine whether the rating should be lowered below investment grade.

The bonds are secured by joint and several pledges of gross revenues of the obligated group, which consists of Citrus Health Memorial Foundation doing business as Citrus Memorial Health System. The bonds were sold on behalf of the hospital by the Citrus County Hospital Board.

The nonprofit Citrus Memorial is a 198-bed facility in Inverness about 80 miles north of Tampa.

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Healthcare industry
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