Standard & Poor's Ratings Services said it lowered its long-term rating to BBB-plus from A-minus on Mississippi Hospital Equipment and Facilities Authority's series 2007A revenue bonds issued for Mississippi Baptist Health Systems.
The outlook is stable.
"The BBB-plus rating reflects our view of Mississippi Baptist's fragmented market, relatively constrained reimbursement environment, and history of weak and uneven operating results that have contributed to reduced cash flow and maximum annual debt service coverage," said Standard & Poor's credit analyst Karl Propst. "While we view the system's balance sheet as still adequate, we believe that MBHS has greater flexibility at the lower rating level," continued Propst.
The lower rating reflects MBHS': volatile operating performance history that we anticipate will remain constrained at least through fiscal 2015 before being restored to above break-even; light maximum annual debt service coverage as per Standard & Poor's calculation; reduced balance sheet strength due to losses; and competitive provider marketplace that has seen significant physician/service line movement in recent years.
A pledge of the obligated group's gross revenues secures the $97 million of rated series 2007A bonds.
