Standard & Poor's Ratings Services said it lowered its rating on Nash Health Care Systems, N.C.'s $68.9 million series 2012 bonds to A-minus from A.
The outlook is stable.
"The downgrade reflects operating losses above expectations in 2013, 2014, and projected again in 2015," said Standard & Poor's credit analyst Cynthia Keller. "We assessed Nash's enterprise profile as adequate characterized by a dominant market share but in a relatively small market with limited economic fundamentals, and its financial profile as strong with very high reserves and relatively light debt counterbalancing the operating losses and reliance on disproportionate share and North Carolina provider tax revenue."
Combined, these credit factors lead to an indicative rating assessment of a-minus and a final rating of A-minus on the hospital's bonds. Nash's 10-year management agreement with UNC Health Care (UNC) effective April, 2014 offers clinical and operating resources that are expected to contribute to management's efforts to restore profitability over the next several years.
The rating is based on Nash Health Care Systems' group credit profile (GCP) and the obligated group's core status. Accordingly S&P rates the bonds at the same level as the GCP. Securing the bonds is a pledge of net receipts and accounts from the authority, Nash Health Care Systems. Under certain circumstances, the pledge will revert to gross receipts and Nash Health Care Systems agrees to upstream funds, if necessary, from its restricted affiliates. All Nash's debt is currently fixed rate.
