Moody's Investors Service said it has downgraded Genesis HealthCare System, Ohio's long-term bond rating to Ba2 from Ba1.
This action affects $295 million of Series 2013 fixed rate revenue bonds issued through the county of Muskingum, Ohio. The outlook is stable at the lower rating level.
The downgrade reflects Genesis' material decline in operating cash flow margin in FY 2013, which further weakens already stressed debt ratios.
Genesis is a two-hospital system comprised of Genesis Good Samaritan and Genesis Bethesda, located less than two miles apart in Zanesville, Ohio (A1 general obligation rating) the county seat of Muskingum County (Aa3 GO rating). The two hospitals combined in 1997, and Genesis is jointly governed by Wisconsin-based Franciscan Sisters of Christian Charity Sponsored Ministries and Bethesda Hospital Association.
The downgrade to Ba2 reflects Genesis' material decline in operating cash flow margin in FY 2013, compared to both FY 2012 actual results and FY 2013 budget. The stable outlook at the lower rating level factors Moody's expectation that Genesis' operating margins should stabilize and improve in FY 2014. Also, Moody's notes that despite the challenged operating results, Genesis' cash on hand remained adequate for a Ba rated credit at fiscal year end (FYE) 2013.
