EMHS Maintains Investment-Grade Rating from Moody’s Investors Service

Brewer, Maine – EMHS maintains its investment-grade credit rating from Moody’s Investors Service even as the bond-rating agency downgraded the system’s debt to Baa2 from Baa1. In maintaining the investment-grade rating, Moody’s cited EMHS’ moderate amount of debt compared to its size, its strong footprint across the state of Maine, and the positive effects of Leadership Reinvented and other systemwide management and governance improvements.

Moody’s said the downgrade considered recent cash flow margins, available cash on hand, an increase in short-term debt, and the challenges EMHS faces as it grows. Moody’s said its outlook for EMHS is stable, citing improvements in operating margins and the system’s continuing ability to fund the investments needed to execute its strategies.

It is expected that the enhanced financial returns will eventually follow EMHS’ system transformation, a pattern that is typical with many healthcare systems across the nation. M. Michelle Hood, FACHE, president and CEO of EMHS, says, “We are in the midst of the biggest transformation of healthcare in half a century, and the decisions we are making are difficult ones that are not made lightly. EMHS remains committed to financial transparency and to access to quality care for the people of Maine. Our strategies are taking hold and will take time to fully come to fruition.”

While disappointed with the decision by Moody’s, Derrick O. Hollings, EMHS chief financial officer, says it did not come as a surprise. EMHS is in the midst of several major initiatives that reflect the system’s firm commitment to strategic alignment and transforming care delivery. “We are making some difficult decisions regarding financial, operational, and service strategies that we believe are right for our communities,” says Hollings. “With these changes, we are enhancing our network and our systemwide infrastructure and governance to best serve the people of Maine, and as we demonstrate the strength of what we are building, we believe others will see we are turning our vision into a reality.”

Bond ratings are like a credit score to help investors gauge a corporation’s worthiness of investment. The bond rating helps determine the interest rate EMHS would need to pay on its debts. This new bond rating potentially affects $144M of EMHS debt.

You can read the full report from Moody’s Investment Services here at: http://www.emhs.org/Document-library/Reports/Moodys-report-2015.aspx.

In April, Standard & Poor’s affirmed its BBB long-term rating for EMHS; learn more here at: http://www.emhs.org/News/2015/S-P-s-Bond-Rating-and-Outlook-for-EMHS-is-Positive.aspx.

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