Covina, Calif.-based Emanate Health’s rating was downgraded to “A” from A+” by Fitch.
The downgrade reflects debt issuance and an operating loss in fiscal 2025, Fitch said in its April 14 report.
Fitch said the system’s slight operating loss in 2025 was driven by continued physician acquisitions and other growth investments. Employed physicians grew by about 11% in 2025. Those additional physicians are expected to yield higher patient volumes and top-line revenue growth.
Emanate’s leadership indicated to Fitch that the period of rapid physician growth will slow, and they anticipate increasing nonphysician providers to support the newly acquired practices. Growth initiatives in oncology, cardiology and orthopedics are also expected to increase volumes.
Debt issuance has increased the system’s debt by more than 30%, dropping cash-to-adjusted debt to below 80%, Fitch said. Cash-to-adjusted debt was about 177% in 2021 and has declined steadily since then.
The system has a negative outlook at its new rating, which Fitch said reflects continued weakness in Emanate’s financial profile. Failure to improve operations and grow unrestricted liquidity could lead to another downgrade.
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