West Reading, Pa.-based Tower Health has secured more than $142 million through a debt refinancing deal with bondholders, nearly doubling its days of cash on hand to almost 60 days, a spokesperson for the health system confirmed to Becker's.
The deal buys Tower more time to execute its financial turnaround and meet its objective of returning to profitability this fiscal year.
"This agreement secures substantial liquidity support and provides a longer-term window to advance our continued financial turnaround efforts," Tower said in a statement shared with Becker's. "These efforts are already gaining traction and yielding significant positive outcomes."
As part of its turnaround efforts, Tower has closed two hospitals, laid off workers, and sold or closed multiple urgent care centers in Pennsylvania. It also will transition revenue cycle operations, patient access services, utilization review and physician advisors to Ensemble, effective July 1. The move will see about 675 Tower employees move to Ensemble.
The health system reported a $27.4 million operating loss for the nine months ending March 31, improving on the $122.8 million loss reported during the same period the prior year. Its long-term debt stands at more than $1.2 billion, according to its most recent quarterly report.
The refinancing was backed by the "vast majority" of Tower's bondholders, a significant endorsement of its financial recovery plan, according to the nonprofit health system. Tower did not disclose a specific bondholder, but said the group represents some of the largest institutional asset managers in the U.S.
"[The refinancing deal] underscores their confidence in our strategy and affirms that we are on a positive trajectory," according to the health system.
Tower was formed in 2017 after the formerly named Reading Health System acquired five Pennsylvania hospitals from Franklin, Tenn.-based Community Health Systems. The transaction included Reading Hospital in West Reading; Brandywine Hospital in Coatesville; Chestnut Hill Hospital in Philadelphia; Jennersville Hospital in West Grove; Phoenixville Hospital in Phoenixville; and Pottstown Hospital in Pottstown.
Tower recently closed Brandywine Hospital and Jennersville Hospital. Its plan to sell Brandywine Hospital to Philadelphia-based Penn Medicine fell through earlier this year.
The health system now includes more than 1,200 beds across its remaining hospitals as well as St. Christopher's Hospital for Children in Philadelphia, in partnership with Drexel University, according to its website.