Butler (Pa.) Health, now merged with Greensburg, Pa.-based Excela Health to form Independence Health System, saw its credit rating downgraded significantly, falling from "A" to "BBB."
The move reflects continued operating challenges and low patient volumes, Fitch said June 26.
Such operating challenges, including low days of cash on hand, could result in potential default of debt covenants, Fitch warned. As of March 31, the health system had $124 million of outstanding long-term debt compared with $133 million of cash and investments.
Even at the new lower "BBB" level, the health system rating remains "considerably pressured."
The merger with Excela, which will see the two systems report financials separately, forms a new five-hospital health system with more than $1 billion of total annual revenues, Fitch said.