Fitch Ratings last week downgraded to BB-plus from BBB-minus $30 million of revenue bonds issued for Beatrice Community Hospital, Neb.
The hospital has another $15 million of 2010 bonds that are not rated by Fitch.
Hospital Authority No. 1 Gage County issued the bonds on behalf of BCH, a rural, 25-bed acute care hospital located in Beatrice, about 40 miles outside Lincoln. The system includes two housing projects and a living facility.
The downgrade is driven by a “significant and unexpected” drop in liquidity, the result of higher than expected cash outlays on capital projects and consulting fees, Fitch said in a report.
Unrestricted cash and investments fell to $8.9 million in fiscal 2012 from $17.2 million the prior year due mostly to a construction of a replacement facility project.
The hospital also faces a large debt burden.
“The stable outlook is supported by Fitch’s expectation that strong volume and profitability trends will continue in BCH’s new facility, and allow it to rebuild its balance sheet over the next 12-24 months,” Fitch said in the report. “Fitch notes that given BCH’s weakened balance sheet flexibility, there will be limited room at the BB-plus rating level for weaker-than-expected operating results.”