Moody’s Investors Service last week affirmed the Baa3 rating on 238-bed Weirton Medical Center but said the rating outlook remains negative.
The action affects $22.5 million of debt issued on behalf of the medical center by the Weirton Municipal Hospital Building Commission.
New senior management has implemented the first phase of a turnaround plan and achieved cost reduction strategies to reduce operating losses by 42% in fiscal 2007. However, management is budgeting for a $1.9 million loss in fiscal 2008, said a report by Moody’s analyst John Hahn.
Debt-to-cash flow improved to a still high 7.3 times in fiscal 2007 from 16.2 times in fiscal 2006. Maximum annual debt service coverage improved to 2 times. Unrestricted cash and investments grew to $38.2 million, or 150 days cash on hand.
“The negative outlook is attributable to continued operating losses and the potential pressures associated with competitors and labor challenges going forward,” Hahn said.
Fitch Ratings downgraded Weirton’s bonds to BBB-minus in October 2006.