Tower Health – the owner of Brandywine, Phoenixville, and Jennersville hospitals – saw its bonds downgraded to “junk” status by a pair of major credit-ratings agencies last week, writes Harold Brubaker for The Philadelphia Inquirer.
Standard & Poor’s and Fitch Ratings slammed the nonprofit healthcare system with the downgrade to BB+ rating after Tower Health reported more than $550 million in operating losses for the two years ending June 30. The two agencies declared it in a “precarious financial position” and said that it “faces a difficult path to recovery.”
Reading-based Tower has also seen its unrestricted financial reserves fall by $240 million over the last two years, with more losses expected in this fiscal year that ends in June.
Three years ago, Tower made a risky, debt-fueled expansion by purchasing five community hospitals in southeastern Pennsylvania, including the aforementioned three in Chester County, from Community Health Systems. This was compounded when COVID-19 hammered already strained health systems’ finances.
Tower also bought St. Christopher’s Hospital for Children out of bankruptcy for $50 million in a joint venture with Drexel University.
“These investments have failed to show meaningful financial progress and continue to be a drain on overall system performance,” said S&P.
Read more about Tower Health in The Philadelphia Inquirer here.
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