The following four health system credit rating downgrades occurred in the past three months. They are listed in alphabetical order.
1. Mercy Hospital (Iowa City, Iowa) — from “Ba3” to “B1” (Moody’s Investors Service)
“The downgrade to B1 reflects the near term challenges that Mercy will face following the large operating loss in fiscal 2020, narrow headroom to the debt service covenant in fiscal 2020 and the pronounced December COVID surge, creating headwinds to retire to historical levels of stronger financial performance,” Moody’s said.
2. NYC Health + Hospitals — from “AA-” to “A+” (Fitch Ratings)
“The downgrade of the NYCHCC bonds is tied to the downgrade of the city’s IDR to ‘AA-‘ from ‘AA’, and reflects Fitch’s expectation that the impact of the coronavirus and related containment measures will have a longer-lasting impact on New York’s economic growth than most other parts of the country,” Fitch said.
3. The Methodist Hospitals (Gary, Ind.) — from “BBB” to “BBB-” (Fitch Ratings)
“The downgrade to ‘BBB-‘ is based on continued operating constraints after significant losses in 2017 through 2019. Interim nine-month fiscal 2020 operating income results, despite the pandemic, reflect an early stabilization trend but at weaker levels that are more consistent with the prior three years,” Fitch said.
4. Tower Health (West Reading, Pa.) — from “BB+” to “BB-” (S&P Global Ratings); from “BB+” to “B+” (Fitch Ratings)
“The two-notch downgrade reflects our view of Tower Health’s continued significant operating losses through the interim period ended Dec. 31, 2020, which have been higher than expected, coupled with recent resignations of members of the senior management team,” said S&P Global Ratings credit analyst Anne Cosgrove.