CHS debt swap plan is unsustainable, Moody’s says

Although Franklin, Tenn.-based Community Health System’s proposed debt exchange plan will alleviate short-term liquidity concerns, it will also add to an already unsustainable capital structure, Moody’s Investors Service said Nov. 4

Advertisement

On Oct. 29, CHS said it plans to offer $700 million in new senior secured notes due in 2027 and up to $1.9 billion in senior unsecured notes due in 2028 in exchange for its $2.6 billion worth of outstanding senior unsecured notes due in 2022.

The plan would increase how much CHS pays in interest.

Moody’s didn’t alter the health system’s current “Caa3” rating in its public comment about the debt swap plan, but said if the plan moves forward it would likely result in downward pressure on some of its ratings.

“If the transaction is completed in its proposed form, the addition of incremental first lien debt will likely result in downward pressure on the existing senior secured first lien ratings of ‘Caa1,'” Moody’s said.

More articles on healthcare finance: 

For-profit hospital stock report: Week ending Nov. 1
Hospitals prepare for looming Medicaid DSH cuts
Study links prior authorizations to treatment delays

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.

Register to Attend Webinar

Reconsider What’s Possible: Enterprise RCM and the Pro-Fee Practice

Tuesday, July 28
11:00 AM - 12:00 PM CDT

Presenters: Garett Kreitz, Med-MetrixJohn Stefanowicz, Med-Metrix

Advertisement

Next Up in Financial Management

Advertisement

Comments are closed.