Renton, Wash.-based Providence’s credit rating was downgraded to “A3” from “A2” by Moody’s.
The downgrade reflects “persistent operating challenges that will keep profitability, debt and liquidity measures suppressed for at least the next year,” Moody’s said in a July 1 report.
Moody’s said that despite incremental improvement over the past two years, Providence’s margins will remain under pressure over the near term due to unfavorable conditions in many of its markets, including union pressure, continued labor shortages, nurse staffing mandates, increased minimum wages, challenging reimbursement and Oregon’s new presumptive charity law.
“Nevertheless, investments and ongoing improvement initiatives have the potential to drive liquidity and cashflow growth, capitalizing on the organization’s strong core capabilities, and extensive array of high acuity services, operating venues, and physician relationships,” Moody’s said.
Providence has a stable outlook at its lowered rating. Moody’s said there is a likelihood that the system’s results will improve over successive quarters following a “particularly weak” first quarter in 2025, which was affected by a number of one-time issues.
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