S&P analyst Jennifer Soule said CNE’s lower rating reflected the health system’s “prolonged period of extremely weak financial performance, thin balance sheet metrics, and declining volume trends that portend deeper utilization challenges and competitive threats within its overall service market.”
The ratings agency also noted CNE’s “inability to achieve its financial targets for fiscal [year] 2018” and the health system’s decision to close Memorial Hospital, a 294-bed facility in Pawtucket, R.I., earlier this month.
CNE’s ratings outlook, which covers a period of one year, and credit profile may be improved if CNE’s proposed merger with Partners results in a definitive agreement. However, S&P would only factor in the “full benefit” of the credit boost if the proposed transaction “has been fully evaluated by regulators, is approved, and penned as final.”
Officials for both Partners and CNE previously stated they remain committed to the due diligence process and “look forward to ongoing progress in the negotiations,” a spokesperson for CNE told Becker’s Hospital Review Oct. 19.
More articles on transactions and valuations:
Report: Hospital M&A slows in Q3; few larger mergers expected for Q4
Dignity Health, Select Medical sign definitive agreement to combine select operations
9 recent hospital transactions and partnerships
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