Moody’s downgraded Children’s Hospital Los Angeles’ credit rating for the second time in 2025 and said the ratings are under review for further downgrade.
Children’s Hospital Los Angeles’ rating was downgraded on Dec. 10 to “Ba1” from “Baa3.” Moody’s said in its report that the downgrade reflects a “material decline in liquidity and operating performance in excess of expectations from our most recent review.”
“A key driver of the weak performance is CHLA’s heavy reliance on state funding due to its significant Medicaid exposure, which reflects its high social risk and is a primary driver of this rating action,” Moody’s said.
Moody’s said the rating is under review for a further downgrade, which could be multi-notch as the agency assesses the risk of additional liquidity and cash flow losses in the near term.
In May, Moody’s lowered the health system’s rating to “Baa3” from “Ba2,” stating that the system had recorded three consecutive years of weak financial performance and had been challenged to rebuild liquidity.
Moody’s said factors that could lead to another downgrade include an inability to stabilize cash on hand around 40 days and a failure to stem operating cash flow losses.
The ratings agency said that Children’s Hospital Los Angeles has a vital role as a premier teaching and research institution and is a leading provider of high-acuity pediatric services.
