Moody’s downgraded the credit rating of Memphis, Tenn.-based Methodist Le Bonheur Healthcare and Portland-based Oregon Health & Science University on June 10.
Oregon Health & Science University’s rating was downgraded to “A1” from “Aa3” by Moody’s, The downgrade reflects a significant drop in cash on hand that Moody’s does not expect to materially recover over the next few years. The system’s debt measure remains modest, despite improved operating performance year to date.
Moody’s said that OHSU has several organizational strengths, including strong philanthropy, excellent academic programs, strong research and essential clinical offerings that draw admissions from across Oregon and neighboring states. OHSU is the only academic medical center in the state and is the exclusive provider of certain high-quaternary procedures.
OHSU has a stable outlook at its new rating.
Methodist Le Bonheur Healthcare’s rating was downgraded to “Baa2” from “Baa1” by Moody’s. The downgrade was driven by continued negative earnings before interest, depreciation and amortization, as well as limited covenant headroom. The system’s ongoing improvement initiatives are being offset by new pressures, such as rising uncompensated care following the expiration of the ACA enhanced tax credits.
Moody’s said Methodist Le Bonheur has a strong position as a regional referral center in the Memphis area and is supported by its reputable children’s hospital and a balance sheet cushion during a period of operating stress.
Methodist Le Bonheur has a stable outlook at its new rating.
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