The financial blows hospitals take after suffering from a ransomware attack may cause them to breach their covenant agreement with bondholders, according to Bloomberg Law.
Pleasant Valley (W.Va.) Hospital cited a ransomware attack as one of the reasons it had to break its covenant agreement with bondholder trustee WesBanco Bank. This is the first time a cyberattack caused a covenant agreement violation, according to a report from Municipal Market Analytics.
After the ransomware attack, Pleasant Valley Hospital spent around $1 million on new computer equipment and infrastructure improvements, hospital CFO Craig Gilliland told Bloomberg Law. These costs along with declining patient volume caused the hospital's debt service coverage to fall to 78 percent, although Pleasant Valley Hospital signed a loan agreement of 120 percent.
Mr. Gilliland said the hospital didn't miss a payment to bond investors. Pleasant Valley Hospital's insurance vendor Beazly Group helped settle and remediate the issue with other vendors.
Threats to credit in the public finance sector will get worse before they get better, analyst for S&P Global Ratings told Bloomberg Law. Since 2016, there have been 133 publicly reported cyberattacks on healthcare providers.