Moody’s Investors Service Tuesday downgraded Mary Washington Healthcare’s rating to Baa1 from A3.
The lower rating affects $263.9 million of outstanding debt issued on behalf of MWH by the Fredericksburg Industrial Development Authority and the Stafford County Economic Development Authority.
The rating outlook is stable.
“The downgrade to Baa1 from A3 follows the two-year trend of declining admissions and challenging start-up of Stafford Hospital that have translated into weaker operating performance and weakened debt ratios as compared with historic and projected levels,” Moody’s analyst Beth Wexler wrote.
At the same time, the health system’s “modest” liquidity declined, which largely reflects a billing system conversion, she said, noting that MWH recently lost its status as sole community provider, resulting in a “material” revenue decline in fiscal 2011.
New debt and covenants in a private bank agreement are also pressuring cash flow and balance sheets, Moody’s said.
