Standard & Poor’s last week revised its outlook to negative from stable on St. Louis-based SSM Health Care’s AA-minus rating on $1 billion of debt due to ongoing economic strains on its balance sheet.

“The negative outlook reflects SSMHC’s balance sheet concerns relating to market performance, pension issues, and pent-up capital demands going forward,” said analyst Brian Williamson. “Management is taking steps within its control to minimize further damage to the balance sheet including but not limited to cutting back on capital spending.”

While challenged, the health care system retains its strong rating due to its strong management and operations. It reported an operating margin of 2.87% for the first quarter of fiscal 2009, compared with 1.30% for the first quarter of fiscal 2008 and 1.6 times for the fiscal year ended Dec. 31, 2008.

SSMHC saw its debt service coverage ratio drop to 1.7 times for the first quarter from 2.6 times for fiscal 2008. It operates or is affiliated with 17 acute-care hospitals and two nursing homes in four states: Missouri, Illinois, Wisconsin, and Oklahoma.

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