OREANDA-NEWS. S&P Global Ratings lowered its underlying rating (SPUR) to 'BB+' from 'BBB-' on Christian County, Ky.'s $60.1 million series 2006 fixed-rate debt, issued for Jennie Stuart Medical Center (Jennie Stuart or JSMC) and insured by Assured Guaranty Corp. The outlook is negative.

"The downgrade reflects our view of Jennie Stuart's significant operating losses incurred in fiscal 2015 of about $7 million; soft volumes, with inpatient admissions declining by 10.1% to 4,799 compared with the previous year; small revenue base ($111 million), a limited medical staff size, and a challenging payor mix; and moderately high leverage and comparatively lower unrestricted reserve-to-long-term debt metrics," said S&P Global Ratings analyst Aamna Shah.

The negative outlook reflects our view of Jennie Stuart's year-over-year operational losses, especially at the medical group, for both fiscal 2015 and fiscal 2014. Although, Jennie Stuart appears to be improving its financial performance on a month-by-month basis (as of July 31, 2016), we believe that maintaining expense control diligence and revenue cycle improvement, in addition to growing the overall top-line, will be essential in restoring profitability over time.

We could consider a lower rating if Jennie Stuart's operations fail to improve as articulated to S&P Global in its long-term forecasts. If fiscal 2016 operating performance deteriorates such that losses approach those in fiscal 2015, we could lower the rating. Similarly, if there is any unexpected balance sheet deterioration of a significant nature, we could also lower the rating.

Given Jennie Stuart's overall weak financial profile, a higher rating is unlikely during the one-year outlook period. However, over time we could consider a positive rating action with sustained improvements in operations and stability in key balance sheet metrics.

Jennie Stuart is a 139-staffed-bed hospital located in Hopkinsville, Ky. Jennie Stuart's primary service area consists of Christian, Todd, and Trigg counties.