Moody's Investors Service said it downgraded Mission Hospital's (d.b.a Mission Regional Medical Center, "MRMC") bond rating to Baa3 from Baa2 assigned to $30.7 million of rated debt outstanding issued by Hidalgo County Health Services Corporation, Texas.
The outlook is revised to stable from negative.
The downgrade to Baa3 is based on several years of declining absolute and relative liquidity position primarily from recurring delays in supplemental funding payments from the state.
The rating also reflects the decline in financial performance in recent years, emblematic of the reliance on supplemental funding as the only not-for-profit hospital in the service area, as well as declining inpatient volumes.
A further downgrade is precluded at this time as the supplement funds for FY 2014 are expected to be received by the end of calendar year 2015 and improve liquidity levels, along with management's continuous effort to lower expenses.
The investment grade rating and the stable outlook are also supported by MRMC's still good debt coverage ratios despite lower performance, low risk debt profile and good market position with the second highest market share in a fast growing primary service area of McAllen-Edinburg-Mission.
These attributes are offset by the highly competitive nature of the service area with a number of for-profit providers and entrepreneurial physicians.
