“The downgrade to ‘B1’ anticipates minimal cashflow and a further significant decline in liquidity this year, following material losses in fiscal 2021 from a 40-day labor strike and the disproportionately severe impact of the pandemic, both social risks under Moody’s ESG classification,” the credit rating agency said in a Feb. 17 report.
Catholic Health System’s rating outlook is negative.
Slow patient volume recovery and high labor expenses are among the challenges that will result in the health system reporting minimal or negative operating cashflow for the fourth year in a row, Moody’s said. The credit rating agency said it expects Catholic Health System’s leverage metrics to remain weak, including projected cash-to-debt of about 70 percent.
Moody’s identified several factors that could lead to an upgrade of Cathlolic Health System’s ratings, including significant growth in days cash on hand and a sustained improvement in operating cashflow margin.
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