Moody's Investors Service has downgraded Exeter Hospital, N.H.'s (Exeter) underlying bond ratings to Baa2 from A3 on $26.6 million of outstanding revenue bonds.
The rating outlook remains negative. The downgrade is based on Exeter's material operating loss in fiscal year (FY) 2013 and Moody's expectation that performance will remain stressed over the near term. Further downgrade is precluded at this time given the strong balance sheet position.
This analysis incorporates the financial performance of Exeter Health Resources, Inc. and subsidiaries. In addition to 100 staffed-bed Exeter Hospital, other system affiliates include: Exeter Healthcare, Inc. (sub-acute and long-term care which merged with the hospital as of August 31, 2013), Core Physicians, LLC (an employed physician group), Exeter Med real, Inc.(an owner of real estate), and Rockingham Visiting Nurse Association and Hospice.
The downgrade to Baa2 is attributable to the material downturn in Exeter's financial performance in FY 2013, resulting in negative operating cash flow and the trend of weakening performance exhibited over the last three years. Further downgrade is precluded at this time given the hospital's strong liquidity position.
The negative rating outlook reflects the continued operating losses in interim FY 2014, and Moody's expectation that performance will remain weak over the near term. If margins do not strengthen in FY 2014 or do not show quarter by quarter improvement, the rating will likely be lowered.
