Eastern Maine Healthcare Systems Bond Rating Outlook Revised To Stable From Negative On Healthy Enterprise Profile

NEW YORK (S&P Global Ratings) July 23, 2019--S&P Global Ratings revised its outlook to stable from negative and affirmed its 'BBB' long-term rating on Maine Health & Higher Educational Facilities Authority's bonds issued for Eastern Maine Healthcare Systems, now doing business as Northern Light Health (NLH). We also affirmed our 'BBB' long-term rating on taxable bonds issued by Eastern Maine Healthcare Systems.
"The outlook revision reflects our opinion that NLH's healthy enterprise profile, stable balance sheet, and favorable year to date underlying trend of earnings at the hospitals driven by a material rebound in performance at the flagship, Northern Light Eastern Maine Medical Center are sufficient to support the 'BBB' rating," said S&P Global Ratings credit analyst Cynthia Keller. "In addition, NLH met expectations for fiscal 2018 operating performance." Also incorporated in the 'BBB' rating is consistent debt service coverage of at least 2x, despite some operating volatility. As a group, hospital performance has been improving, although over the past several years earnings have been diluted due to significant spending on information technology, performance improvement consulting expenses including shared savings, and rebranding, which has resulted in weaker overall financial performance.
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