Moody's Investors Service has downgraded Brewer-based Eastern Maine Healthcare Systems' bond rating to "Baa2" from "Baa1," affecting $144 million of debt.
Here are three things to know about the rating downgrade and the system's outlook.
1. The rating downgrade was driven by a number of factors, including several years of weak operating cash flow margins even with recent improvement, modest days cash on hand diluted by the system's merger with Mercy Health System in Portland, Maine, increasing short-term debt, and elevated risks related to executing multiple consolidation, construction, merger and payer strategies over the next two years, according to Moody's.
2. The rating downgrade also reflects a moderate debt level, EMHS' strong market position as the second largest healthcare system in Maine, and positive effects of a significant governance and management restructuring.
3. The system's outlook was revised to stable from negative, which reflects Moody's expectations "that operating margins will continue to improve and investments will be at least maintained."
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