Butler Health revised to negative rating following debt coverage breach

Butler (Pa.) Health, which merged with Greensburg, Pa.-based Excela Health on Jan. 1 to form a $1 billion revenue entity, saw its credit watch revised to negative after it breached a debt coverage agreement, Fitch Ratings said Feb. 22.

The rating refers both to its default rating and on $79 million of revenue bonds. The breach referred to a loan agreement with Truist Bank, Fitch said.

"Butler financial results through December 31 suggest that its operating challenges persist, exacerbated by inflationary pressures on labor and supplies, but also patient volumes, which have yet to rebound to pre-pandemic levels," Fitch said of the new rating category.

Butler Health reported an operating loss of $16.6 million in its final quarter as a separate system.

The merger with Excela created a five-hospital system serving approximately 750,000 patients.

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