Fitch Ratings on Monday downgraded the operator of Boca Raton Community Hospital — BRCH Corp. — to BBB-plus from A-minus and placed the credit on negative watch.
The downgrade followed BRCH’s $41.6 million reported operating loss in its fiscal year 2007 audit, said a report by Fitch analyst Jim Mitchell. The rating action affects approximately $128 million of outstanding debt.
“The operating loss is on $317.7 million of revenue, resulting in a negative operating margin of 13.1%,” Mitchell said. “While the loss includes certain one-time charges and adjustments, a significant portion reflects a continuing deterioration of operating fundamentals.”
BRCH also reported that it failed to meet its required debt service coverage ratio of 1.1 times.
“Fitch is scheduled to meet with BRCH management in early February and will take further rating action at that time as appropriate, but expects that BRCH will remain in the BBB rating category,” Mitchell said.
Standard & Poor’s assigns an A rating to the bonds.