Tower Health hit with 3-notch credit downgrade due to deteriorating finances

S&P Global Ratings lowered West Reading, Pa.-based Tower Health’s long-term rating three notches due to its deteriorating finances in fiscal year 2020. 

The credit rating agency lowered its long-term rating to “BB+” from “BBB+.” The rating outlook remains negative. The downgrade affects about $1.3 billion of long-term debt. 

“The three-notch downgrade reflects the significant deterioration in Tower Health’s financial profile in the fiscal year ended June 30, 2020, including a severe loss from operations and negative cash flow resulting in inadequate debt service coverage ratios,” said S&P Global Ratings credit analyst Kenneth Gacka.

S&P said that Tower Health’s losses were a result of operating issues that were exacerbated by the pandemic. 

Tower Health also said in an Oct. 28 disclosure form that it plans to engage a restructuring consultant in early November. 

The negative outlook reflects S&P’s expectation that Tower Health will continue to see operating losses in fiscal year 2021. 

More articles on healthcare finance: 
New Hampshire health system files for bankruptcy
6 recent donations to hospitals, health systems
CHS records $112M profit, says it will sell 4 more hospitals by year-end


© Copyright ASC COMMUNICATIONS 2020. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.