Fitch Ratings downgraded to A-plus from AA its rating on Reid Hospital & Healthcare Services Inc., affecting $188 million of debt. The outlook remains negative at the lower rating.
Reid is located in the city of Richmond, and holds an 83% market share in Wayne County, where it is the only hospital. The 232-bed facility had fiscal 2009 operating revenues of $282.5 million, Fitch said.
The hospital lost nearly $18 million in income in 2008 and 2009, and reported the loss of another $9.3 million as of June 2010. Problems include a weak regional economy, leading to a loss of commercial-payer patients and an increase in the number of Medicaid patients.
Fitch analyst Michael Burger also cited “increased expenses related to Reid’s replacement hospital, which has resulted in a financial profile that is no longer characteristic of an AA-minus credit.”
The system’s debt includes $86 million of variable-rate bonds that are remarketed daily and supported by a standby bond purchase agreement with JPMorgan Chase Bank NA.
Reid also has two interest-rate swaps with Citi that have a mark-to-market valuation of negative $14.8 million.