24 health system rating downgrades

Multiple hospitals and health systems have suffered downgrades to their financial ratings this year amid rising expenses, ongoing operating losses and challenging work environments.

Here are 24 hospitals and health systems that received credit rating downgrades from Fitch Ratings or Moody's Investor Service in 2024:

Fitch downgraded Roseville, Calif.-based Adventist Health's rating to "BBB+" from "A." The downgrade is primarily driven by the significant increase in leverage (about 31%) Adventist is taking on, in part to support the acquisition of two hospitals from Dallas-based Tenet Healthcare. Long-term debt is expected to increase by about $750 million once the deal closes. 

Fitch downgraded Minneapolis-based Allina Health's rating from "AA-" to "A+" with its rating outlook at stable. The downgrade was driven by operating challenges Allina has faced over the last two years coupled with balance sheet metrics that are more in line with the "A+" rating.

Moody's downgraded Cabell Huntington (W.Va.) Hospital's rating to "Baa3" from "Baa2." The downgrade was driven by the hospital's "rapid decline of unrestricted cash and investments resulting in material deterioration of days cash and cash to debt," Moody's said. 

Astoria, Ore.-based Columbia Memorial Hospital had its rating lowered to "BBB+" from "A-" by Fitch because of a weaker financial profile as a result of the hospital's issuance of its series 2024 bonds for hospital expansion efforts.

Fitch Ratings downgraded Frederick (Md.) Health Hospital's rating to "BBB+" from "A-" after a slower than expected recovery in  operating performance since fiscal year 2022. The downgrade also reflects continued operating pressure in 2024, signaling a more protracted operating improvement following a challenging 2022 and 2023.  

Fitch downgraded Hannibal (Mo.) Regional Healthcare System's rating to "BBB-" from "BBB+." The downgrade is driven by persistently high expense growth that led to a $7.5 million operating loss (-2.6% operating margin) in fiscal 2024, Fitch said. The system's days of cash on hand fell from 84 on Sept. 30, 2023, to 66 on Sept. 30, 2024.

Fitch downgraded Beaver, Pa.-based Heritage Valley Health System's rating from "A+" to "A." The downgrade reflects ongoing operating and excess losses that have persisted over the past four years, Fitch said. 

Fitch downgraded Meadowbrook, Pa.-based Holy Redeemer Health System's rating to "BB-" from "BB+." The ratings agency said the downgrade "reflects a multi-year trend of sizable operating losses that has led to a steady decline in liquidity, thereby reducing the system's financial flexibility."

Moody's downgraded Montgomery, Ala.-based Jackson Hospital & Clinic's rating to "Caa2" from "B1." Its outlook remains negative. Moody's said the downgrade reflects its projection of Jackson's "deteriorated cash flow and financial position which has resulted in failure to make rental payments."

Fitch downgraded Marshall, Mo.-based John Fitzgibbon Memorial Hospital's rating to "CCC-" from "CCC." The downgrade reflects John Fitzgibbon's ongoing pressured operations and highlights the hospital's light liquidity position, small size, and challenging payer mix, "which provide a very low margin for safety," Fitch said. 

Fitch downgraded Marshfield (Wis.) Clinic's rating to "BBB" from "BBB+." The downgrade reflects operational challenges connected to expenses that have not adequately flexed to variable revenues as the health system continues to integrate following a period of high growth, and higher than budgeted medical loss ratios at the health plan.

Moody's downgraded Mount Sinai's rating to "Baa3" from "Baa1" and revised its outlook to negative from positive. Moody's said the New York City-based system's rating is "constrained by multiple issues developing over the past year." These include delays in the closing of Beth Israel hospital, a prolonged disruption in collections due to the Change Healthcare cyberattack, and worse than expected financial performance across the system. 

Moody's downgraded Norman (Okla.) Regional Hospital Authority's rating to "B1" from "Baa1." The downgrade reflects "a material and precipitous decline in liquidity well in excess of projections at the time" of Moody's most recent review, the ratings agency said.  Heavy reliance on a short-term line of credit — which is currently fully drawn — ongoing cash flow losses and challenges with the master facility project also contributed to the downgrade. 

Moody's downgraded Brewer, Maine-based Northern Light Health's rating to "Ba3" from "Ba2." The downgrade reflects an inability to stabilize liquidity, reliance on short-term bank lines, and ongoing cash flow losses, Moody's said. The rating is under review for a further downgrade as Moody's assesses the risk of additional liquidity drains and cash flow losses, as well as risks related to line of credit renewals currently under negotiation.

Moody's downgrade Mount Airy, N.C.-based Northern Hospital District of Surry County's rating to "B2" from "B1." The downgrade reflects the community hospital's inability to stem operating cash flow losses, having recorded a third consecutive year of stressed financial performance in fiscal 2024, Moody's said. The hospital's outlook remains negative at its new rating.

Moody's downgraded Bellevue, Wash.-based Overlake Hospital Medical Center's rating to "Baa2" from "Baa1." Its outlook has been revised to stable from negative. The ratings agency said the downgrade was driven by the system's weakened liquidity position and expected slow recovery of financial performance.  

Fitch downgraded Palomar (Calif.) Health's rating to "BB+" from "BBB-" because of its financially challenged results over the last 18 months. The system's weaker performance was driven by various factors, including declining volumes, and heightened labor and supplies expenses that are primarily related to post-pandemic inflationary pressures.

Fitch downgraded DuBois, Pa.-based Penn Highlands Healthcare's rating from "A-" to "BBB." The downgrade reflects fiscal year 2024 results through March that have not kept pace with Fitch's prior expectations.  

Fitch downgraded Porterville, Calif.-based Sierra View Local Health Care District's rating to "A-" from "A." The downgrade primarily reflects Sierra View's challenged financial performance since fiscal 2023, which resulted in a $16 million loss (-10.2% operating margin), Fitch said. 

Moody's downgraded Middleburg Heights, Ohio-based Southwest General Health Center's rating to "Baa3" from A3. The downgrade reflects further deterioration of financial performance with negative cash flow projected for fiscal 2024 and several years before margins return to historical levels, Moody's said.  

Fitch downgraded Houston-based Texas Children's Hospital's rating to "AA-" from "AA." The downgrade reflects Texas Children's "material underperformance in profitability," which is driven by multiple factors, Fitch said. Those factors include weaker than expected volumes in its Houston market, a delayed opening of a new Austin inpatient facility and operating headwinds faced by its health plan.

Burlington, Mass.-based Tufts Medicine was downgraded from a "BBB" to a "BBB-" credit rating amid slower than expected operating improvement, including another year of "significant operating losses, coupled with a year over year decline in unrestricted cash and investments," according to Fitch. 

Moody's downgraded the ratings of Valhalla, N.Y.-based Westchester County Health Care Corp. and Charity Health System to "B1" from "Ba1." The downgrade of WCHCC's rating reflects a material decline in liquidity to a "very weak level concurrent with growing near-term demands on cash, increasingly high reliance on short-term bank lines, and higher-than-expected cashflow losses," Moody's said. The downgrade of CHS' rating is based on WCHCC's legal guarantee to pay debt service on CHS' bonds.

Moody's downgraded Jackson-based West Tennessee Healthcare's rating from "A2" to "A3." The downgrade reflects Moody's view that materially weaker days of cash on hand and cash-to-debt measures "no longer support the higher rating at a time when performance is still recovering and substantial capital spend will slow the rebuild of liquidity."

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