Photo Credit: Joshua L. Jones/file

Athens Regional Medical Center, before it was renamed Piedmont Athens Regional earlier this month.

The investment rating firm Moody's isn't optimistic about Piedmont Healthcare's future after it acquired the hospital formerly known as Athens Regional Medical Center.

Moody's gave three upcoming bond issues totaling $406 million an Aa3 rating (i.e. really safe) but downgraded Piedmont's credit outlook to "negative" in part because of the debt the company is taking on to acquire ARMC and its subsidiaries, according to Saporta Report, a news site run by longtime Atlanta journalist Maria Saporta.

Piedmont committed to spending more than half a billion dollars earlier this year to acquire Athens Regional Health Services, ARMC's parent nonprofit. Piedmont (also a nonprofit) agreed to take on $195 million in debt and spend $375 on capital improvements over the next seven years, including renovations to labor and delivery, the emergency room and intensive care; more outpatient centers in outlying communities; and costly robotic surgical equipment and accounting software, ARHS CEO Charles Peck said in April.

According to Moody's analysts:

Management has demonstrated a core competency in integrating smaller, distressed hospitals into the system as it expands its footprint through mergers. The revision of the outlook to negative reflects a material increase in debt associated with this issuance that will weaken debt service coverage and leverage metrics. Furthermore, the newly merged entity, Athens Regional Medical Center, only shows a recent history of stable operations and represents a sizable addition to Piedmont. Athens is not located in the Atlanta metro area, presenting additional challenges to successfully integrate operations and gain synergies.

Moody's also cited a $600 million bond issue to fund a new tower at its Buckhead location.

In addition, Moody's said that physicians in Athens are "highly independent and fragmented, which we believe represents the greatest risk to achieving synergies and improving Athens’ financial results.”

Local doctors revolted against ARMC leadership in 2014, forcing out CEO James Thaw and another top executive.

After Charles Peck replaced Thaw as CEO in 2015, Peck set out to find a "strategic partner" that would allow ARMC to grow.

The organization's executives and board of trustees settled on Piedmont. Athens-Clarke County commissioners and other regulators approved the deal over the summer, and it was finalized Oct. 1. Piedmont and ARMC unveiled a rebranding of the local hospital as Piedmont Athens Regional earlier this month.