Fitch Ratings has downgraded Minneapolis-based Allina Health's long-term ratings on bonds from "AA-" to "A+" with its rating outlook at stable.
The downgrade was driven by operating challenges Allina has faced over the last two years coupled with balance sheet metrics that are more in line with the "A+" rating, according to Fitch.
Allina Health reported a $352.6 million operating loss (-6.8% margin) in 2023, an 80% drop from the $195.8 million loss (-3.4% margin) reported in 2022. However, strategic cost reductions and growth led to a $1.9 million operating income before restructuring and strike expenses in the fourth quarter — the first quarter Allinia reported a positive operating income in more than two years, according to financial documents published Feb. 14.
The health system continues to address the rise in its expense base and was able to stem a much larger operational loss in fiscal 2023, than if no initiatives were implemented.
Fitch expects Allina's operational improvement to continue over the outlook period and balance sheet metrics to improve over a longer period.