United Health System bonds downgraded
Standard & Poor's Ratings Services on Thursday downgraded West Virginia United Health System's bonds one notch, saying future projects may put a strain on the organization's balance sheet.
The rating agency downgraded its long-term and underlying ratings for the organization's revenue bonds - issued by the West Virginia Hospital Finance Authority - to 'A' from their previous 'A+' rating.
The new rating means analysts think the United Health System has a strong capacity to meet financial commitments, but is somewhat susceptible to adverse economic conditions and changes in circumstances.
"The downgrade is due to a sizable capital plan and likely increase in debt within a year that we believe will result in a financial profile more commensurate with an 'A' rating," said Liz Sweeney, credit analysts with Standard & Poor's.
The hospital system is made of up West Virginia University Hospitals Inc., United Hospital Center, University Healthcare (including Berkeley Medical Center, City Hospital Foundation Inc., and Jefferson Medical Center), and the two Camden-Clark Memorial Hospital facilities in Parkersburg.
The more than $596 million in bonds cover various projects dating back nearly a decade and are backed by a gross revenue pledge from the group of hospitals.
The hospital chain has already received preliminary approval from the Hospital Finance Authority for nearly $290 million in additional projects, including a new bed tower for Ruby Memorial Hospital in Morgantown.
Analysts said those projects could stretch the resources of the hospital system.