Englewood, Colo.-based Catholic Health Initiatives finalized its acquisition of MHS earlier this month, and the outlook for MHS could be upgraded or downgraded depending on how CHI handles the acquired system’s debt, according to Moody’s. A rating upgrade is possible if MHS’ debt is unconditionally guaranteed by CHI. However, a downgrade could also occur if the debt is not refunded and operating performance doesn’t improve with the implementation of CHI’s methods and processes.
Moody’s has also confirmed a “Baa3” bond rating for the system on $107.1 million in outstanding bonds issued by Lufkin Health Facilities Development. The rating confirmation reflects MHS’ acquisition and CHI’s plans to improve operating performance through savings from supply chain initiatives, revenue cycle improvements and contract negotiations. As part of the deal, CHI pledged $84 million in capital over the next six years.
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