Moody's Investors Service downgraded Oelwein, Iowa- based Mercy Hospital's revenue bonds to "B1" from "Baa2," affecting $71.4 million of debt.
The downgrade is a result of several factors, including the hospital's unexpected material variance in fiscal year 2017, current trend of weak operating performance, decreasing inpatient volumes and strong competition from Iowa City-based University of Iowa Hospital.
The outlook was placed under review for downgrade, reflecting uncertainty surrounding the hospital's debt restructuring, depletion of liquidity and an assumed covenant breach.