Moody's: Non-profits aren't losing any strength
NEW YORK – Even though credit rating downgrades issued by Moody’s Investor Service are running slightly ahead of upgrades, not-for-profit hospitals financially are very healthy, according to an analyst with the New York-based company.
“The performance of the majority of hospitals is at the healthiest levels we’ve ever seen,” said Beth Wexler, senior credit officer for Moody’s. “They’re coming off a period of unbelievable strength a year ago.”
In the second quarter, which ended June 30, Moody’s reported downgrading 12 credit ratings, compared with nine upgrades. The ratio of downgrades to upgrades was similar to the previous quarter and on a par with the same quarter a year ago.
The dollar amount of rating upgrades was nearly twice that of rating downgrades, largely as a result of an upgrade for nearly $3 billion in debt issued by the Winter Park, Fla.-based Adventist Health System. Otherwise, the dollar value of upgrades and downgrades was similar.
The largest debt issuers receiving downgrades between April and June of this year were $914 million in debt issued by Wheaton Franciscan Services, to Baa1 from A3, and Resurrection Health Care, to A3 from A2.
Through the first half of 2007, downgraded ratings outpaced upgrades by a ratio of 1.4 to 1, compared with a ratio of 1.5 to 1 in the first six months of 2006, Moody’s analysis showed.
In the second quarter of 2007, the credit rating company affirmed the ratings of 63 not-for-profit healthcare organizations, representing about two-thirds of all rating actions. That debt totaled $19.2 billion.
The main drivers of rating downgrades were continued deterioration in operating performance and liquidity, Wexler said. Four of the downgraded organizations had added “a sizeable amount of debt after experiencing poor financial performance,” a report issued by Moody’s indicated.
