S&P Global Ratings lowered the outlook on Louisiana Children's Medical Center Obligated Group bonds to negative from stable and affirmed the A rating Friday.
The lower outlook impacts $1.1 billion in bonds outstanding, issued through the Louisiana Public Facilities Authority. As of December 31, it had $2.11 billion in total liabilities, according to its annual financial information disclosure.
The negative outlook reflects S&P's view of the group's "unrestricted reserve metrics, which have remained pressured despite improved performance and lower capital spending in [2024]."
Preliminary LCMC fiscal 2025 performance is below budget, S&P said. Though LCMC expects improvements in the balance of the year, this softer start and the group's elevated Medicaid exposure further support the negative outlook, it said.
LCMC in recent months has had 100 days or less of cash on hand, S&P said.
S&P said it would likely downgrade the group unless its unrestricted reserve position improved.
The group reported 27.4% of its revenue came from Medicaid in 2024.
Touro Infirmary is scheduled to join formally into LCMC on June 1. S&P said this will raise Touro's bond debt to A from A-minus. Because of that, S&P placed the Touro debt on CreditWatch with positive implications.
LCMC could not be immediately reached for a comment on S&P's action.
