Moody's Investors Service has affirmed the "Baa3" rating on Lanham, Md.-based Doctors Community Hospital's approximately $145 million of outstanding bonds and revised the hospital's outlook to stable from negative.
The rating affirmation, which took into account the financial performance of the entire Doctors Community Hospital and Subsidiaries system, was supported by a number of factors, including DCH's location in a favorable service area and its improved operating margins in fiscal year 2014. The DCH system's operating margins improved that fiscal year with an adjusted 9 percent operating cash flow margin, according to Moody's.
The system also faces some challenges, which were considered for the rating affirmation, such as weak adjusted debt coverage ratios at the "Baa3" level and DCH being a small hospital facing competition in its broader service area, according to Moody's.
Moody's expects that improved operating margins will at least be sustained in fiscal year 2015 and beyond, partly because of DCH's participation in Maryland's global budget revenue system.
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