Fitch downgraded Meadowbrook, Pa.-based Holy Redeemer Health System’s credit rating to “B+” from “BB-” and placed the system on rating watch negative.
The downgrade reflects ongoing operating pressures, with an operating deficit continuing year-to-date in fiscal 2025 despite ongoing improvement initiatives that are beginning to yield results, Fitch said in a June 6 report.
Fitch said that over the past five years, the system’s financial profile has been strained by several challenges, including declining volume staffing shortages, record-high labor costs, inflation and investment market volatility.
The system’s obligated group was not in compliance with its debt service requirements in fiscal 2024, and a consultant was brought in to assist with developing an improvement plan, according to the report. Initiatives have been implemented over the past several months and revenue enhancements from these efforts are exceeding projections, but overall performance remains weak.
The rating watch negative reflects the possibility Holy Redeemer violates its debt service covenant for a second consecutive year, which could trigger debt acceleration, according to the report.
