Providence Health & Services, Wash.'s weak financial report will not affect the ratings on its outstanding debt, Standard & Poor's said.
The not-for-profit Catholic health care system recently released a report saying its six-month results for fiscal 2013 were weaker than its first quarter's performance.
The system is based in Renton, Wash. and operates health care facilities and service providers throughout the state, as well as in Oregon, Montana, Alaska, and California.
"In our view, the latest results are still consistent with data that led us to revise the rating outlook to negative last year," analysts said in a report. "As a result, we are not taking any rating action at this time, and note that management has responded quickly to the modest shortfall through a series of actions to restore overall profitability and cash flow to budgeted levels."
Standard & Poor's currently rates Providence Health's debt at AA-minus. The negative outlook reflects a financial profile that, while strong, is light for the rating, and incorporates the current weakness.
Management has developed a plan of correction that will be implemented over the course of the current year, according to Standard & Poor's.
The weaker-than-expected results reflect softer volumes, as well as a drop in the number of surgeries, which management believes is due to broader industry pressures.
"Failure to improve overall operating margins to over 2% or improve days' cash on hand, and cash to debt metrics from levels demonstrated at fiscal 2012 year-end would cause a downgrade within the two-year outlook horizon," analysts said.
A revision to a stable outlook would be based on solid improvement in the financial profile.
