Moody's Investors Service downgraded Pittsburgh-based UPMC from "Aa3" to "A1," affecting $2.9 billion of debt.
In addition, Moody's downgraded UPMC-Hamot's bonds, which are parity obligations for UMPC, from "Aa3" to "A1."
The downgrade is a result of several factors including UPMC's rapid expansion project, high execution risk following the acquisition of Harrisburg, Pa.-based PinnacleHealth and a new service area with high competition. Moody's also acknowledged UPMC's increased debt burden, below average financial performance and suppressed margins. Offsetting an additional notch downgrade is UPMC's strong market position, integration of various hospital acquisitions and core competency in acute care management.
The outlook is negative, reflecting Moody's expectation that UPMC's rapid expansion may pose financial and cultural stress.