The credit rating agency lowered its long-term rating to “BB+” from “BBB+.” The rating outlook remains negative. The downgrade affects about $1.3 billion of long-term debt.
“The three-notch downgrade reflects the significant deterioration in Tower Health’s financial profile in the fiscal year ended June 30, 2020, including a severe loss from operations and negative cash flow resulting in inadequate debt service coverage ratios,” said S&P Global Ratings credit analyst Kenneth Gacka.
S&P said that Tower Health’s losses were a result of operating issues that were exacerbated by the pandemic.
Tower Health also said in an Oct. 28 disclosure form that it plans to engage a restructuring consultant in early November.
The negative outlook reflects S&P’s expectation that Tower Health will continue to see operating losses in fiscal year 2021.
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