OREANDA-NEWS. S&P Global Ratings revised its outlook to negative from stable and affirmed its long-term 'BBB+' rating on Colorado Health Facilities Authority's series 2015A tax-exempt revenue bonds, issued for Evangelical Lutheran Good Samaritan Society (the Society), S. D. In addition, we revised our outlook to negative from stable and affirmed our long-term ratings and underlying 'BBB+' ratings (SPURs) on debt issued by various issuers on behalf of the Society.

S&P Global Ratings also affirmed its 'AA-/A-1+' rating on the Society's series 1996, 2007, and 2008 variable-rate demand bonds. We based our ratings on our low-correlation joint-criteria methodology, with the long-term rating based jointly on a letter of credit (LOC) with US Bank N. A. and the 'BBB+' SPUR on the Society's debt, while the 'A-1+' short-term rating is based solely on the bank rating.

"The revised outlook to negative reflects our assessment of the Society's continued weak financial performance, with several years of deficit operations continuing through the six month interim period ended June 30, 2016, coupled with what we view as relatively light, and declining, liquidity," said S&P Global Ratings analyst Stephen Infranco. Because the Society maintains a fairly light liquidity position, there is limited financial cushion available to absorb continued stress to the income statement. At the time of the last rating review, the Society reported breakeven operations through the first quarter of fiscal 2015. However, due to increased pressure on census levels, operations began to slide and actual fiscal 2015 results were weaker than projected. Given the Society maintains a fairly light liquidity position, in our opinion, projected improvement in financial performance would be a key factor to maintaining the rating over the next one - to two-year period.

The negative outlook reflects our assessment of the Society's continued weak financial performance, with several years of deficit operations continuing through the six month interim period ended June 30, 2016, coupled with what we view as relatively light, and declining, liquidity.

A lower rating could be warranted if management's initiatives to improve operations do not result in some meaningful progress. Factors that would be viewed negatively include continued negative margins of 2% to 3% and weak cash flow such that maximum annual debt service (MADS) coverage continues at 2x or lower. Other factors that could pressure the rating include declines in liquidity below current levels or debt increases without a commensurate rise in unrestricted resources.

Given the current financial profile, including recent history of operating deficits, weaker debt related metrics, and light liquidity, we don't believe a higher rating is likely during the outlook period. However, we could revise the outlook to stable if the Society can demonstrate disciplined fiscal management such that one or more of the following occur: multiyear trend of improving operating results, resulting in MADS coverage closer to the 2.0x to 2.5x range; liquidity trending above current levels with days' cash approaching 150 or higher; and capital expenditures remaining consistent and manageable with the level of cash flow being generated.