Fitch downgrades Texas Children's Hospital

Fitch downgraded Houston-based Texas Children's Hospital's rating to "AA-" from "AA." 

The downgrade reflects Texas Children's "material underperformance in profitability," which is driven by multiple factors, Fitch said in its July 9 report. Those factors include weaker than expected volumes in its Houston market, a delayed opening of a new Austin inpatient facility and operating headwinds faced by its health plan. 

Those factors contributed to an operating loss of  $198.1 million (-6.4% operating margin) through the first six months of fiscal 2024, according to the report. 

Fitch said it believes Texas Children's has a solid balance sheet for the lower rating, "providing ample financial flexibility for management to turnaround operations."

"This is especially true given the organization's position as a nationally known, premier provider of a full continuum of pediatric care and high-end OB/GYN services," Fitch said. 

Texas Children's has a stable outlook with Fitch. 

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