The system faces some challenges, which were considered for the rating assignment, such as its location in a highly competitive market and its operating performance being weakened by transfers to the Chapel Hill, N.C.-based UNC Health Care System.
However, the challenges were counteracted by a number of factors, including the system’s strong patient volume, favorable payer mix and good operating performance prior to giving consideration to system transfers. Rex Healthcare’s ownership structure “provides long term institutional credit support, but pressures margins in the near term as Rex contributes cash to fund systemwide strategic initiatives,” according to Moody’s.
Moody’s also downgraded the rating on Rex Healthcare’s existing debt to “A2.”
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