Moody’s Investors Service has revised its outlook on Mercy Hospital’s A2 rating to negative from stable due to a decline in operating performance.
The review came ahead of the the Iowa system’s planned $44.5 million issuance this week. The action affects $82.4 million of debt.
The hospital benefits from a strong market position in a demographically favorable service area of Iowa City and surrounding counties, growth in its already very strong liquidity, and maintenance of adequate debt-service coverage.
“The outlook revision to negative from stable reflects the decline in operating performance of this small-sized system ... the inability to return the operating cash-flow margin to previous levels would pressure the rating,” Moody’s wrote.