JACKSON — Fitch Ratings has downgraded Mississippi Baptist Health System’s (MBHS’) $113.9-million Mississippi Hospital Equipment and Facilities Authority revenue bonds, series 2007A, to “BBB+” from “A-.”
The rating outlook is revised to “stable” from “negative.”
Fitch said the downgrade reflects declining profitability and weakening business position. Profitability continues to decline with earnings deteriorating since the end of fiscal year (FY) 2008 as a result of significant inpatient volume declines, mostly due to the loss of several key cardiac physicians. Additionally, the business position is weakening as inpatient admissions declined 4.6 percent in FY 2008 and another 6.1 percent in FY 2009.
Fitch said despite the operating losses, MBHS maintains an excellent cash position.
Rating stability is anticipated at the lower rating level so long as operating losses and moderately high capital plans do not erode MBHS’ strong cash position. Operating earnings are expected to improve as a result of management’s recently enacted cost reduction, utilization improvement, and revenue cycle initiatives. Upcoming capital spending plans of about $200 million for FY 2011-2014 that could pressure liquidity if current operational performance does not improve.