Moody's Investors Service said it has downgraded to A2 from A1 the rating assigned to Heritage Valley Health System, Pa.'s (HVHS) bonds issued by the Beaver County Hospital Authority.
The rating outlook is stable at the lower rating level.
The downgrade to A2 follows thin financial performance through six months of FY 2014, which, while trending better than FY 2013, is soft relative to the 2014 budget and A1 rated medians.
The downgrade also reflects Heritage's multi-year departure from its historic operating profile generating variable financial performance that has been below the A1 medians since 2011.
The A2 rating is well supported by solid market capture, still ample absolute liquidity, very modest leverage and limited demands on cash-flow. The stable rating outlook reflects Moody's belief that Heritage's operations in FY 2014 will better FY 2013 and improvement will continue into FY 2015 given management's strategies to address revenue and expenses while instituting financial rigor to the operations.
