S&P Global Ratings issued a negative outlook for Newark, Del.-based ChristianaCare.
The S&P also affirmed ChristianaCare's "AA+" long-term rating based on the health system's leading business position within its service area and healthy balance sheet, according to an Oct. 27 report. The health system also has a light debt load and well-funded defined-benefit pension plan.
However, pressures from the pandemic and industry challenges have led to a "volatile operating performance" in the last three years, and ChristianaCare has a small revenue base compared to similarly rated health systems.
"The negative outlook reflects [ChristianaCare's] operating volatility and balance sheet deterioration that, while largely stemming from COVID-19 pandemic and industry pressures, are not characteristic of the 'AA+' rating level and could lead to a downgrade during the outlook period," Chloe Pickett, an S&P credit analyst, said in the firm's report.
The S&P could lower its rating if ChristianaCare does not improve its operating margins and days' cash on hand; the firm could also revise the outlook to "stable" if the system meets or exceeds finance expectations.