9 recent credit downgrades

Here is a summary of recent credit downgrades and outlook revisions for hospitals and health systems.

Catholic Medical Center (Manchester, N.H.): The system suffered its second downgrade in a matter of weeks when S&P Global lowered its rating two notches from "BBB+" to "BBB-" Sept. 6 amid declining operating margins. That downgrade followed one by Moody's in late August.

Nuvance Health (Danbury, Conn.): Concerns about the system potentially not meeting debt obligations resulted in its rating being downgraded from "BBB+" to "BBB," S&P Global said Sept. 21. Such a debt covenant miss would require a call-in of consultants.

Nuvance Health, a seven-hospital system, was similarly downgraded in July by Moody's, which warned that the system faced a "pivotal" next several quarters. The system had $2.6 billion in revenue in 2022.

Children's Hospital Los Angeles: The system was downgraded Sept. 15 to "BBB" with a stable outlook by S&P Global.

Guthrie Clinic (Sayre, Pa.): Guthrie Clinic was downgraded to "A" from "A+" amid "accelerated" and higher-than-expected operating losses in fiscal 2023, Fitch said Sept. 22.

The four-hospital system reported a $72 million operating loss, $50 million of which was attributed to contract labor costs and other staffing issues, Fitch said. The planned acquisition of Binghamton, N.Y.-based Our Lady of Lourdes Memorial Hospital, due to close in early 2024, may increase short-term pressure on Guthrie but is likely to be a net positive longer-term, according to the note.

Reid Health (Richmond, Ind.): Reid Health saw its long-term rating on a series of bonds lowered to "BBB+" from "A-" Sept. 21 amid "accelerating operating losses" and weak debt service coverage, S&P said. The outlook is stable, reflecting sound strategies to improve margins, the agency noted.

Wise Health System (Decatur, Texas): The three-hospital system, a target of Nashville, Tenn.-based HCA Healthcare subsidiary Dallas-based Medical City Healthcare was downgraded five notches from "BB+" to "B-" as it continues to suffer from operating losses that are only likely to worsen in the near term, S&P Global said Sept. 15.

Tower Health (West Reading, Pa.): Tower Health was downgraded from "CCC+" to "CCC" amid ongoing financial losses, Fitch Ratings said Sept. 19.

Although "a measure of improvement" was seen in the final three months of its fiscal year ended June 30, operating results continue to struggle even as the three-hospital system enacted strategic initiatives such as the sale of Chestnut Hill Hospital in Philadelphia, Fitch said.

Tufts Medicine (Burlington, Mass.): "Significantly elevated" operating losses at Burlington, Mass.-based Tufts Medicine have resulted in the system having credit ratings downgraded two notches to "BBB-" from "BBB+," S&P Global said Sept. 14.

The downgrades apply to various sets of bonds. The system was removed from CreditWatch negative, where it was placed Aug. 3, while the outlook remains negative.

Ascension (St. Louis): While it had its default rating and that on a series of $6.6 billion of bonds affirmed at "AA+" Sept. 26, Fitch revised the outlook for the 140-hospital system to negative from stable. The move follows a $3 billion operating loss reported Sept. 14.

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