Jessica Gladstone, a Moody’s senior vice president, commented on how the payout would affect CHS’ financial picture Sept. 26. The settlement “will severely weaken the company’s already constrained liquidity,” she said.
Ms. Gladstone warned that the settlement could cause CHS to violate its credit agreements.
“We expect the company will need to borrow on its revolvers in order to fund the settlement, reducing the cushion under the company’s already tight financial covenant on its revolving credit facility, potentially leading to a covenant breach over the next 12-15 months,” she said.
In a Sept. 25 news release announcing the settlement, CHS said the $262 million settlement is expected to be paid in October.
More articles on healthcare finance:
CMS miscalculated MIPS payment adjustments: 4 things to know
Temple University Health System’s finances improve as Epic install costs shrink
Steward closes Ohio hospital, lays off 468
At the Becker's 11th Annual IT + Revenue Cycle Conference: The Future of AI & Digital Health, taking place September 14–17 in Chicago, healthcare executives and digital leaders from across the country will come together to explore how AI, interoperability, cybersecurity, and revenue cycle innovation are transforming care delivery, strengthening financial performance, and driving the next era of digital health. Apply for complimentary registration now.