Winona Health Nears Junk

Standard & Poor’s downgraded Winona Health Obligated Group’s debt one notch to BBB-minus — just one step above junk status — due to ongoing operating losses.

Winona Health’s $14 million of debt from a 2007 issue and $19 million from a 2004 issue was sold through the city of Winona.

“The lowered rating reflects two consecutive years of operating and excess losses that have exceeded expected losses, light coverage of maximum annual debt service, and weakened unrestricted liquidity since fiscal 2007,” analyst Kenneth Gacka wrote. “The losses have been driven in part by generally lower overall volumes and increased costs associated with integrating two physician groups acquired since January 2008.”

Winona Health’s operating performance had been consistently good prior to 2008. Management attributes the losses since then primarily to lower patient volumes and the increased costs associated with employing its new physicians over the last two years.

Winona is a 99-bed general acute-care facility and the only hospital in Winona County.

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Healthcare industry
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