The new campus of St. Anthony Hospital opened in 2011 in the Denver suburb of Lakewood.

DALLAS – Catholic Health Initiatives sustained its second credit downgrade in a month Tuesday when Moody's Investors Service lowered the healthcare giant's rating one notch to Baa1 and retained a negative outlook.

The downgrade affects $5.7 billion of Moody's rated debt. CHI has about $9 billion of total debt outstanding, analysts said.

On March 2, S&P Global ratings lowered CHI to BBB-plus from A-minus but restored the negative outlook to stable.

In response to that downgrade, CHI spokesman Michael Romano cited the Inverness, Colo.-based health system's strengths, including almost $16 billion in annual revenue in the 2016 fiscal year, and a balance sheet with total assets of about $22.7 billion.

"We expect a strengthening of our financial performance – and a strengthening of our credit profile," Romano said.

Moody's attributed its downgrade to continuation of weak operating performance across multiple markets, and persistently modest liquidity levels.

"CHI is highly levered, with direct debt more than doubling since 2011, with net revenue available for debt service decreasing by 24% over the same period," Moody's analyst Brad Spielman wrote.

CHI plans to refinance about $1 billion of bullet maturities, direct placements, and lines of credit that come due within the next nine months, Spielman said.

To preserve liquidity, CHI reduced its capital spending over the last two years. As of Dec. 31, 2016, the system had 142 days cash on hand, compared to 195 days at the end of fiscal year end 2014, analysts said.

One factor that could lead to a downgrade would be an "inability to access the debt capital markets at reasonable rates in order to address debt restructuring needs," Spielman noted.

After passage of the Affordable Care Act in 2010, CHI launched an unprecedented expansion, increasing revenues by nearly 80% since 2012.

In 2012, CHI became the sole corporate sponsor of Alegent Health, a multi-hospital system headquartered in Omaha, Neb., with operating revenues exceeding $1 billion. Earlier the same year, CHI completed a merger in Kentucky to create a state-wide network KentuckyOne Health. On June 1, 2013 CHI acquired the operations of St. Luke's Health System in Houston, a six hospital system generating over $1.3 billion in annual revenues.

Smaller acquisitions have come in Ohio, Kansas, Texas, Iowa, North Dakota and Colorado.

CHI is currently in talks with California-based Dignity Health that could lead to a merger of the two nonprofit health systems. That would give CHI access to the California and Arizona markets.

A merger of the two systems would create one of the largest not-for-profit health care systems in the country, with a combined pro forma revenue base of nearly $30 billion, according to Moody's. The earliest that the transaction could close is mid-2017.

"This review does not give effect to any potential credit impact that this transaction would have," Spielman said.

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