The Rating Outlook is Stable.
Debt payments are secured by a pledge of the gross revenues and a debt service reserve fund.
KEY RATING DRIVERS
WEAKENED PROFITABILITY: The rating downgrade reflects MBHS's profitability deterioration in fiscal year (FY) 2013 and through the eight-month interim period of 2014 (ended
INCREASED DEBT BURDEN: MBHS's debt burden remains elevated for the rating category reflecting a
SOLID LIQUIDITY: MBHS's unrestricted liquidity position decreased by 6.4% from
INCREASED CAPITAL SPENDING: MBHS's capital spending has been robust in the past four audited years and reached a peak in FY 2013 at 272.1% of depreciation expense. Capital expenditures are projected to be elevated over the near term, but are expected to drop below depreciation by FY 2016.
OPERATING PERFORMANCE IMPROVEMENT: Fitch believes MBHS's operating improvement initiatives will take hold in the near term and generate improved operating profitability in FY 2015 in line projected targets. Further negative rating actions could ensue if operating performance materially deviates from projected levels for FY 2015 or if there is further material decline in liquidity metrics.
MBHS operates a 435 staffed-bed hospital in
MBHS recorded a
ELEVATED DEBT BURDEN
Following the execution of a
INCREASED CAPITAL SPENDING
MBHS is in the process of renovating its main hospital campus, with two out of the four existing floors having been renovated to date. Management states that future capital expenditures in relation to the renovation will be approximately
MBHS covenants to provide annual and quarterly disclosure. Disclosure is provided through the Municipal Securities Rulemaking Board's EMMA system.
Additional information is available at 'www.fitchratings.com'.
--'Revenue-Supported Rating Criteria',
--'Nonprofit Hospitals and Health Systems Rating Criteria',
Revenue-Supported Rating Criteria
U.S. Nonprofit Hospitals and Health Systems Rating Criteria
Dmitry Feofilaktov, +1 212-908-0345
Source: Fitch Ratings
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