Moody's Investors Service last week downgraded Northwest Community Hospital's rating one notch to A1 due to its weakened financial performance.
The action affects nearly $289 million of rated debt. The hospital does not have an upcoming bond issue but over the next two months it will replace letters of credit on its Series 2008B and C bonds. JP- Morgan Chase Bank will provide the new LOCs. The hospital also will convert its 2002B bonds to a private placement.
The downgrade "reflects several consecutive years of weakened performance and a financial profile that is more leveraged than anticipated," Moody's wrote.
The hospital suffered its third consecutive year of operating declines in fiscal 2010. It also is challenged by a growing percentage of revenue from Medicare, Medicaid, and self-pay sources.
The rating is supported by solid demand of over 25,000 admissions annually and leading market position, healthy liquidity with about 291 days cash on hand, and the strong socio-economics of the service area. NCH also has limited near-term capital plans and benefits from a large and loyal medical staff, Moody's said.