An update on credit rating activity since Nov. 29 at eight hospitals or health systems:
Fitch Ratings
1. Fitch downgraded West Reading, Pa.-based Tower Health's revenue bond rating to "BBB" from "A." Fitch said the three-notch downgrade resulted from the challenges Tower Health has faced in integrating five acute care hospitals it acquired from Franklin, Tenn.-based Community Health Systems in 2017.
2. Fitch downgraded Grand Forks, N.D.-based Altru Health System's revenue bonds to "BBB" from "A-." The two-notch downgrade is mainly attributed to the Altru's deteriorating operating performance over the last two years. Fitch said the financial decline has rendered the system less able to absorb the estimated $150 million of additional debt to fund its replacement hospital project.
Moody's Investors Service
3. Moody's assigned its "A3" rating to The Christ Hospital's proposed hospital facilities revenue bonds and affirmed its "A3" rating on the Cincinnati hospital's outstanding parity debt. The assignment and affirmation are a result of the hospital's solid operating performance, which Moody's expects to continue due to the system's effective expense management program and growth strategies. Its strong market share was also a factor.
4. Moody's downgraded the University of Chicago Medical Center's long-term rating to "A1" from "Aa3." The rating downgrade is a result of Moody's expectation that despite improved operating performance, the medical center will not see large enough margins to offset its high leverage. Moody's also cited its highly competitive market and continued operational challenges at Ingalls Health System in Harvey, Ill., which it merged with in 2016, as reasons for the downgrade.
5. Moody's upgraded Harvey, Ill.-based Ingalls Health System, which merged with University of Chicago Medical Center in 2016, to "A1" from "Baa2." The upgrade is a result of a change in bondholder security. In addition, Ingalls is now entered into the obligated group of University of Chicago Medical Center.
6. Moody's downgraded Greensburg, Pa.-based Excela Health's rating to "Baa1" from "A3," affecting $63 million of outstanding debt. The downgrade was attributed to Moody's expectation that the health system will have a modest operating performance in fiscal year 2020, following a multiyear trend of weak margins.
7. Moody's assigned its "Baa3" rating to Ashland, Ky.-based King's Daughters Medical Center's proposed $100 million refunding revenue bonds and affirmed its "Baa3" rating on the medical center's outstanding debt. The assignment and affirmation are a result of the system's healthy market position, stable liquidity metrics and improved operating performance.
S&P Global Ratings
8. S&P affirmed its "A-" long-term rating on Daytona Beach, Fla.-based Halifax Health's revenue bonds. The rating reflects Halifax Health's adequate financial profile, characterized by strong cash on hand, modest margins and an elevated debt load relative to rating medians.
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