...The removal of the Rating Watch Negative and the downgrade to 'A¡' from 'A' is based on Fitch's application of the revised not-for-profit healthcare criteria that adds a five times multiplier on MedStar's high number of operating leases to adjusted debt when evaluating leverage. MedStar is assessed as a midrange revenue defensibility and mid-range operating risk assessment founded on Fitch's expectations that financial results will remain at or above the historical levels of approximately 7.3% operating EBITDA margins. While MedStar's current leverage metrics are in line with a 'bbb' financial profile in Fitch's rating positioning table, the later years of the rating case reflect metrics that are in line with an 'a' assessment through a modeled economic cycle after accounting for possible future debt issuances and capital expenditures that are mostly funded from restricted sources (debt and philanthropy). MedStar's management did not participate in the rating process for this review, but...
