Scottsdale, Ariz.-based HonorHealth’s credit rating was downgraded to “A” from “A+” by Fitch.
The downgrade reflects higher-than-expected strategic spending and weaker operating results during the integration of assets it acquired from Dallas-based Steward Health Care in 2024, Fitch said in its March 18 report.
Fitch said the system’s operating EBITDA margin declined to 5.4% in fiscal 2025 from 6.3% in fiscal 2024, primarily driven by a lag in integrating the Steward assets. HonorHealth incurred higher costs to maintain legacy EHR systems at the facilities during the conversion, which also resulted in pressure on volumes.
HonorHealth’s leadership told Fitch that the Steward facilities improved from operating losses in the first quarter of 2025 to operating gains in the fourth quarter. The system expects to see volume growth in 2026 when its Deer Valley Medical Center expansion project is completed.
Capital spending plans will likely exceed depreciation to support HonorHealth’s need to continue serving projected population growth in the greater Phoenix metropolitan area, Fitch said.
HonorHealth has a negative outlook at its new rating.
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