The bond rating firm Fitch announced this week that it is downgrading the debt of a Tulare county hospital. The Tulare Local Health Care District saw its rating dip from BBB- to BB+.
The firm cited the hospital’s recent drop in profitability, and dramatic decline in liquidity as factors for the downgrade. The organization believes the hospital’s financial health will stabilize in the remainder of 2012, as a new 24 bed emergency wing is completed at the Tulare Regional Medical Center.
In the eight months before February 29, the hospital posted a loss of $1.8 million, and saw cash on hand drop from $19.2 to $10.5 million. The hospital issued $16 million in revenue bonds in 2007 to fund its current expansion, which includes an expanded emergency room, an obstetric unit and 27 new patient rooms.
The report from Fitch also cast doubt on the hospital's plans for future growth beyond the current construction project. The district has plans to eventually build a second tower, with a cost of $25-$30 million. But Fitch says that the hospital's current financial situation leaves no room to take on additional debt through issuance of revenue bonds.
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