Moody's Investors Service said it has placed the Baa3 rating assigned to Saint Peter's University Hospital, N.J., on review for downgrade, affecting $165.7 million in rated debt outstanding.

This action follows St. Peter's release of unaudited six months financial statements ending June 30, 2012 showing a loss from operations of $4.2 million and operating cash flow of $9.8 million (calculations exclude investment income of $2.4 million).

As a result, the operating cash flow margin has declined to 4.6%, down from 6.7% in full FY 2011 and reversing the financial improvement reported in FY 2011 (0.5% operating margin and 6.7% operating cash flow margin).

Inpatient admissions have declined 5.4% through June 30, 2012 compared to the prior year comparable period while combined admissions and observation stays are down 4.4%. Unrestricted cash and investments as of June 30, 2012 at the obligated group is approximately $93.6 million, an improvement from the end of FY 2011.

Moody's expects to conclude its review within the next 90 days.

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