DALLAS — Denver's National Jewish Health lost an investment grade rating after Standard & Poor's downgraded the healthcare system to BB-plus from BBB-minus.
The Sept. 3 downgrade on bonds issued though the Colorado Health Facilities Authority came seven months after similar action by Fitch Ratings. Outlooks from both ratings agencies are stable.
"The rating action reflects our view of NJH's increased operating losses in
fiscal years 2013 and 2014 to date, which have resulted in weak maximum annual debt service coverage," said Standard & Poor's credit analyst Avanti Paul.
The research and healthcare provider has $24.2 million of fixed-rate bonds issued in 2012 and $11 million of variable rate bonds issued in 2005 outstanding.
The 2005 bonds are backed by the UMB Bank National Association.
NJH suffered large operating losses in fiscal year 2013, which weakened further through the 2014 fiscal year. Operating margin was negative 4.4% in fiscal 2013 and doubled to 9.6% in the first six months of the 2014 fiscal year, analysts said.
In September 2013, NJH signed a letter of intent with Exempla St. Joseph Hospital to form a joint operating agreement. Exempla St. Joseph is part of Sisters of Charity of Leavenworth organization.
Founded as a Jewish charity to treat tuberculosis patients in 1899, National Jewish later dropped any religious affiliation.
Until 1968, the hospital accepted only patients without health insurance, and all care was free. The system continues to provide free or heavily subsidized care to needy patients.
Several healthcare magazines and other organizations have called National Jewish one of the top research and treatment facilities in the nation. The hospital remains a nationally recognized specialist in pulmonary health.