Moody's cuts Tenet corporate family to B3

Moody's Investors Service said it downgraded the corporate family rating of Tenet Healthcare, Inc. to B3 from B2 and confirmed the ratings on the company's senior unsecured notes at B3.

The outlook for the ratings remains negative.

Moody's also confirmed the speculative grade liquidity rating at SGL-4.

The ratings downgrade primarily reflects Moody's belief that the company will continue to face operating challenges resulting in negative free cash flow and credit metrics that no longer support the B2 rating. These operating challenges include weak volume trends at the company's hospitals in a period in which the industry as a whole is seeing sluggish volume growth and the continued increase in the number of uninsured and underinsured patients.

Positive factors reflected in the rating, Moody's said, include diversity and scale and the recent rationalization of the portfolio. Additionally, a favorable rate environment with regard to Medicare reimbursement should help to stabilize operations in the near-term. Further, the company does not have any debt maturities over the rating horizon and maintained a cash balance of approximately $1.5 billion at Sept. 30.

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