Moody's has lowered St. Louis-based Ascension's outlook to negative from stable.
Four things to know:
1. Moody's said the negative outlook reflects Ascension's challenges in improving operating cash flow margins to pre-pandemic levels without relying on positive one-time items, such as Federal Emergency Management Agency grants.
2. The rating agency said that while Ascension's days of cash on hand will likely stay above 200, it will be difficult for the system to grow to peer levels "modest cash flow, rising capital spending, and any potential cash impact" related to a cybersecurity incident.
3. Ascension reported a $1.8 billion operating loss for the fiscal year ending June 30, despite a $1.2 billion operating improvement in core operations. The FY 2024 results include $402 million in one-time, non-cash write-downs and non-recurring losses. A substantial amount of the loss was due to the May ransomware attack, resulting in reduced revenues from the associated business interruption along with costs incurred to address the issues and other business-related expenses.
4. Ascension has an "Aa2" rating with Moody's. The rating reflects expected completion of a significant portfolio reduction by next year, which will reduce material losses and allow the system to focus on growth strategies in other markets, Moody's said. The rating also reflects a continuation of strong operating improvements before the ransomware attack. Ascension reported a $79 million operating loss (-0.3% margin) for the 10 months ending April 30, a substantial improvement on the $1.2 billion operating loss in the previous 10-month period.