S&P Global Ratings recently affirmed Memphis, Tenn.-based Methodist Le Bonheur Healthcare's "AA-" rating and revised the health system's rating outlook from stable to negative.
The rating outlook revision comes after Methodist Le Bonheur Healthcare entered into a definitive agreement to acquire two Tennessee hospitals, the physician practices associated with the hospitals, and six urgent care centers from Dallas-based Tenet Healthcare for $350 million.
"The negative outlook reflects our view that Methodist's credit profile could become inconsistent with the current rating should the Tenet acquisition close as expected given the purchase price and operating pressures we observe that often occur following a system's acquisition of new hospitals," S&P said in a release. "Though we would anticipate incremental improvement in Methodist's post-acquisition enterprise profile, this may not fully offset the near-term financial profile weakening."
When the deal was announced in December, the parties said they expected the transaction to close in 2020, pending regulatory approval. If the transaction closes, Methodist Le Bonheur Healthcare would have the highest number of inpatient admissions in the Memphis market, followed by Baptist Memorial Health Care, according to the Memphis Business Journal.