Boston-based Dana-Farber Cancer Institute’s credit rating was downgraded to “A2” from “A1” by Moody’s amid the construction of a new hospital tower.
Dana-Farber Cancer Institute and Beth Israel Deaconess Medical Center on April 7 began construction on an estimated $1.68 billion cancer hospital in Boston. The 300-bed hospital will span 450,000 square feet across 10 inpatient floors and is expected to open in 2031.
Moody’s said in its April 20 report that the downgrade reflects Dana-Farber’s significant increase in leverage and the anticipation that a portion of its liquidity will be allocated toward capital expenditures related to the hospital project.
Moody’s also said that the upcoming shift in clinical affiliation is expected to “introduce transition risks and alter market dynamics as competing oncology programs work to retain patients, physicians and researchers.” In 2023, Dana-Farber announced it would end its longtime partnership with Somerville, Mass.-based Mass General Brigham in 2028 and construct a hospital with Beth Israel Deaconess Medical Center.
Dana-Farber expects project-related expenses to weigh on results in 2026 and 2027, though operating cash flow margins are projected to remain above 5%, Moody’s said.
The A2 rating reflects Dana-Farber’s established reputation in cancer research and treatment, which is bolstered by its longstanding partnerships with top academic and clinical organizations. It has a stable outlook at its new rating.
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