Fitch Ratings downgraded Marietta, Ohio-based Memorial Health System's series 2015 and series 2012 bonds to "BB-" from "BB," affecting approximately $196 million of debt.
Concurrently, Fitch assigned MHS an issuer default rating of "BB-."
The downgrade and assignment are a result of several factors, including MHS' weaker leverage profile, lower-than-expected operating performance in fiscal year 2017 and high reliance on governmental payers. Fitch also acknowledged the health system's track record of adequate cost management, favorable capital investments, growing market share and volume growth.
The outlook is stable, reflecting Fitch's expectation that MHS will improve profitability to historical levels after fully implementing its EMR system.