Moody's assigns 'A1' rating to Valley Health System's bonds, outlook negative

Moody's Investors Service has assigned "A1" bond ratings to Winchester, Va.-based Valley Health System's series 2014 and 2014A fixed rate bonds and affirmed the "A1" long-term rating on $193.2 million of outstanding bonds.

The assignment and affirmation of the A1 rating reflects VHS's leading market position and strong balance sheet. The health system faces little competition for acute care services in its primary service area. VHS reported improved operating performance through the first six months of 2014, with an operating cash flow margin of 12.7 percent.

The negative outlook rating is based on two years of performance that failed to support additional debt incurred by the health system. If VHS's debt coverage ratios do not improve in 2014, the health system would likely receive a rating downgrade.

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