DALLAS-- Ohio based Wood County Hospital Association was downgraded to a junk bond rating of Ba1 by Moody’s Investors Service, which also revised its outlook to negative.
Moody’s cites local market competition and financial losses as reasons behind the rating action. The health provider also faces potential reductions in Medicaid reimbursement that could challenge bottom line performance.
“Given challenges related to revenue growth the system will need to tightly manage expenses in order to achieve budgeted 2018 performance,” Moody’s stated.
The downgrade impacts $53.8 million of debt which is secured by a joint and several gross revenue pledge of the Obligated Group. Wood County is the conduit issuer. Obligated Group members include Wood County Hospital Association, Wood County Women's Care of Bowling Green, LLC, Wood Health Company, LLC, WHC Medical Services, LLC and Falcon Health Center, LLC.
Moody’s noted that the health association had “ample headroom” to meet bond covenants. However the rating agency warned that an inability to meet and sustain 2018 budgeted performance or a decline in liquidity would result in a downgrade.
Wood County Hospital Association includes a 196-bed acute care hospital, two general physician groups with 45 providers, an OB/ GYN practice and the student health center on the Bowling Green State University campus. The system’s main campus is approximately 25 miles outside of Toledo. It maintains a 40% market share but is facing increased competition from larger providers such as ProMedica and Mercy Health.
The system had $77 million of unrestricted cash and investments, as of fiscal year end 2017. Its cash flow positive was $14 million below prior year.