Catholic Health suffers credit rating downgrade

Buffalo, N.Y.-based Catholic Health had its credit rating downgraded and is in danger of defaulting on its covenants, Moody's said Nov. 17.

The nonprofit health system, which serves residents in Western New York state with four acute care hospitals and several other facilities, saw its rating on approximately $364 million of debt drop from "B1" to "Caa2." Staffing costs, ongoing impacts from the pandemic and a prolonged labor dispute have resulted in "material cash flow losses," which are unlikely to go away anytime soon, Moody's said.

"Despite progress reducing agency costs and ramping up net hires, it will be difficult to reduce cash flow losses quickly given labor challenges amid national shortages and the costs of the new union contract as well as volumes that remain well below pre-pandemic levels," Moody's said.

The downgrade follows a similar pattern from around this time last year, when Catholic Health also suffered a decline in ratings.

While the outlook remains negative, Catholic Health plays an essential role in the region and should benefit from the expansion of surgery centers and investments in Niagara County, Moody's said.

Copyright © 2023 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.


Featured Whitepapers

Featured Webinars