Moody’s downgrades Texas system’s debt rating to speculative
Moody’s dropped the debt rating of ETMC Regional Healthcare System to speculative grade, saying the hospital company needs to change its operating trajectory to avoid putting bond covenants at risk in early 2018.
Moody’s downgraded ETMC five notches from Ba1, which is just below investment grade, to B3, a speculative rating indicating high risk. Moody’s outlook on the system remained negative.
Based in Tyler, Texas, 11-hospital ETMC has been posting operating losses and posted a margin of negative 6.9% in its fiscal 2017 first quarter, ended Jan. 31.
Moreover, ETMC is facing volume pressures from its cross-town rival, Trinity Mother Frances Health System, which was acquired in May by much bigger Christus Health. Christus, with more than 50 hospitals and long-termcare facilities, has the capital to expand services in the market, Moody’s said.
Though it has divested some rural hospitals in recent years, East Texas still owns rural hospitals that are suffering from declining populations and economic troubles in the oil patch.