Moody's Investors Service has downgraded to A2 from A1 the rating assigned to King's Daughters' Medical Center's $240.0 million of rated debt outstanding issued through the city of Ashland, Ky., and the Kentucky Economic Development Finance Authority.
The outlook is revised to negative from stable.
The downgrade to A2 and the negative outlook stem from material operating losses in FY 2013 driven by volume declines, insurance payment delays, and new expenses as management seeks to improve financial performance in a challenging operating environment.
The downgrade to A2 from A1 is attributable to KDMC's material operating losses through nine months of fiscal year (FY) 2013, driven by volume declines, payment delays from managed care organizations, and new expenses related to KDMC opening an outpatient facility in the secondary service area.
These challenges are offset by KDMC's leading market position as a comprehensive tertiary regional referral center with limited competitive pressures and an historically strong balance sheet.
The negative outlook reflects challenges to implement multiple comprehensive strategic initiatives simultaneously in an effort to stabilize operating performance while continuing to face volume pressures in a difficult operating environment.
