Fitch Ratings downgraded Buffalo, N.Y.-based Catholic Health System's revenue bonds to "BBB" from "BBB+," affecting $173 million of debt.
Concurrently, Fitch assigned its "BBB" issuer default rating to Catholic Health.
The downgrade and assignment are a result of several factors, including the health system's weak profitability over the past three years, highly competitive service area, unfavorable payer mix and underfunded pension plan. Fitch also acknowledged Catholic Health's leading market position and manageable capital plans.
The outlook is stable at the lower rating, reflecting Fitch's expectation that the health system's operating margins will improve in the upcoming years.