CHICAGO — Standard & Poor's revised its outlook on Chicago-based Presence Health Network's BBB-plus rating to negative from stable Nov. 6 over its operating losses.

The system — created by the 2011 merger of Provena Health and Resurrection Health Care Corp. — accesses the market through the Illinois Finance Authority. The two merged their obligated groups earlier this year. The system has $557 million of debt.

"The outlook revision reflects our view of the network's operating losses in fiscal 2013 and a balance sheet that, though stable and adequate, is not strong enough to absorb that level of losses on an ongoing basis," Standard & Poor's said.

Management has a turnaround plan in place and has seen some success in improving core operations, but analysts said the system faces ongoing challenges at some of its hospitals and as the overall volumes for the market continue to contract.

"Although 2013 results are lower-than-anticipated after a very solid fiscal 2012, we believe that the accelerated improvement plan and management's willingness to consider more difficult decisions related to the kinds of services delivered at various hospitals could improve operations during the next one to two years," analysts added. "However, if the operating losses continue or remain closer to break-even, we believe that the rating could come under pressure."

The rating reflects the system's solid business position with good revenue dispersion, a stable balance sheet, and managerial ability to deliver on improved operations in fiscal 2012. Presence is the second largest health system in the Chicago region and the largest Catholic one.

The system enjoys a sizeable market footprint in Chicago and the surrounding counties, operating 12 hospitals and 27 senior living and long-term care facilities.

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