The two-hospital system recorded an approximately $184 million loss and a -19.2% operating margin for the fiscal year ended June 30 (inclusive of tax-supported revenues and expenses, and per Fitch’s analytical methodology including interest expense), according to a Dec. 18 report from the ratings agency. Fitch said Palomar’s financial performance was unexpectedly down from a $44.5 million operating loss in fiscal 2023.
Fitch said the steep drop in financial performance was primarily due to a significant cyber event that lasted several months and severely disrupted operations and key billing functions. Palomar also experienced declining patient volumes, a shift in payer mix toward higher governmental payers, and “stubbornly high labor and supplies expenses due to post-pandemic inflationary pressures.”
Moody’s downgraded Palomar Health’s rating to “B2” from “Baa3” in October. Moody’s said the dwongrade refelcted “very thin” cash balances and ongoing cash flow losses.
To combat rising losses, Palomar announced in November it was reducing its workforce by 2%, about 85 people, focusing on leadership and back-office roles while sparing clinical and patient-facing staff.
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