Tower Health receives another credit downgrade from S&P Ratings

On Tuesday, Standard & Poor’s downgraded Tower Health’s credit rating from CCC+ to CCC, citing low financial reserves and concerns about the nonprofit health system’s ability to pay off $64.6 million in bonds due in February. Despite efforts to cut costs, improve bill collection, and sell or close unprofitable businesses, Tower Health continues to face financial challenges due to high labor costs and inflation.

Tower Health strongly disagreed with S&P’s rating decision, stating that it does not accurately reflect the organization’s positive momentum and financial performance. With bond payoff deadlines quickly approaching, Tower Health faces a risky investment profile that requires a favorable business environment to meet its debt obligations.

Despite closing or selling some hospitals, Tower Health continues to own several facilities, including Phoenixville and Pottstown Hospitals and a stake in St. Christopher’s Hospital for Children in Philadelphia. To address its financial issues, Tower Health has engaged the services of investment bank Houlihan Lokey to explore refinancing options. The organization’s long-term debt stands at about $1.5 billion, far exceeding its unrestricted reserves of $159.8 million as of December 31. This precarious financial position has prompted the organization to consider negotiating debt relief with bondholders to potentially extend deadlines and address its financial challenges.

By Sophia Gonzalez

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