Business

Ratings agency changes Steward’s credit outlook

Carney Hospital in Dorchester is one of the facilities operated by Steward Health Care System LLC.

Jonathan Wiggs/Globe Staff/File

Carney Hospital in Dorchester is one of the facilities operated by Steward Health Care System LLC.

Moody’s Investors Service said Thursday that it has changed its credit rating outlook for Boston-based Steward Health Care System LLC from positive to stable, warning that a “challenging operating environment” could slow the company’s financial progress.

At the same time, Moody’s affirmed Steward’s actual credit rating of B3, which a spokesman for the rating firm called “speculative grade” subject to high credit risk. If the rating were to be downgraded in the future, it would make it harder for the company to borrow money.

Advertisement

“The change in the rating outlook to stable reflects Moody’s expectation that improvement in Steward’s operating results will take longer to realize than the rating agency originally expected given the challenging operating environment,” the rating firm said in a statement.

Moody’s statement said it expects for-profit Steward to “continue to operate with very high leverage and limited ability to repay debt through free cash flow” because of weaknesses in the volume of hospital patients and other factors. Slower operating improvements will also make it harder for Steward to repay debt over the next 12 to 18 months, it said.

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.
Thank you for signing up! Sign up for more newsletters here

“Moody’s has affirmed Steward’s existing rating in spite of a challenging operating environment facing all health care providers,” said Brooke Thurston, a Steward vice president. “Steward’s financials have improved, including demonstrating positive cash flow and reduction in debt. The company is in a stronger position than it was a year ago. For anyone following the health care industry, remaining stable in this environment is a success.”

Steward, which is owned by private equity form Cerberus Capital Management, operates St. Elizabeth’s Medical Center and Carney Hospital in Boston along with eight other acute care hospitals, a rehabilitation center, and a larger physicians group in eastern Massachusetts.

Robert Weisman can be reached at robert.weisman@globe.com. Follow him on Twitter @GlobeRobW.
Loading comments...
Real journalists. Real journalism. Subscribe to The Boston Globe today.
We hope you've enjoyed your free articles.
Continue reading by subscribing to Globe.com for just 99¢.
 Already a member? Log in Home
Subscriber Log In

We hope you've enjoyed your 5 free articles'

Stay informed with unlimited access to Boston’s trusted news source.

  • High-quality journalism from the region’s largest newsroom
  • Convenient access across all of your devices
  • Today’s Headlines daily newsletter
  • Subscriber-only access to exclusive offers, events, contests, eBooks, and more
  • Less than 25¢ a week
Marketing image of BostonGlobe.com
Marketing image of BostonGlobe.com