Lawrence & Memorial Hospital, Conn., Downgraded to A-Minus by S&P

Standard & Poor's Ratings Services said it lowered its rating to A-minus from A on the Connecticut Health & Educational Facilities Authority's series F bonds issued for Lawrence & Memorial Hospital (L&M).

The outlook is negative.

"We lowered the rating based on L&M's weakened financial profile," said Standard & Poor's credit analyst Jessica Goldman, "characterized by continued operating losses, a weaker reserve position, and coverage not in line with the rating."

S&P assesses the enterprise profile as strong with dominant market share. The financial profile is adequate, characterized by operating losses in the last two fiscal years and budgeted for the current fiscal year.

The A-minus rating on the hospital's bonds better reflects the expected improvement in operating performance, strong balance-sheet characteristics, and maintenance of the strong business position.

"The rating reflects our assessment of L&M's weaknesses, specifically a sharp decrease in operating profitability in the last three fiscal years from historical levels," said Goldman.

Other weaknesses include its: continued volume softness in fiscal 2014; and weakened balance-sheet position with less financial flexibility than when the rating was assigned.

The rating reflects L&M's strengths, including its: dominant business position in the primary service area with about 68% market share; significant focus on expense-control measures and improving operating performance; and healthy reserves relative to debt, which are above median levels.

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