MANCHESTER – Catholic Medical Center in Manchester had its credit rating downgraded by Moody’s in late August, and has now also been downgraded by S&P, according to Becker’s Hospital Review.
S&P lowered the center’s rating from “BBB+” to “BBB-” Sept. 6 amid declining operating margins and uncertain strategic direction, S&P said.
“The two-notch downgrade reflects a rapid decline in operating margins, particularly in the first nine months of fiscal 2023, coupled with a trend of diminishing reserves that we believe no longer offsets the magnitude of the losses,” Marc Arcas, S&P Global Ratings credit analyst, told Becker’s.
Catholic Medical Center is the largest hospital in an affiliation of three New Hampshire facilities operating under the banner of GraniteOne Health. That affiliation is to be dissolved pending regulatory approval, Becker’s reported.
Moody’s previously mentioned CMC’s important role as the primary cardiac surgical service provider in the Manchester service area.
But said it is “offset by its relatively modest scale of operations and competitive market. While liquidity remains adequate, CMC’s weak operating performance has driven cash declines and reduced financial flexibility.
“Operating losses are largely driven by a heavy reliance of contract labor, elevated wages and inflationary pressures,” Moody’s said.
CMC spokesman Laura Montenegro said Friday: “As both Moody’s and S&P noted, hospitals around the country have faced significant financial challenges related to inflation and labor costs.
“CMC is not immune. In response, CMC has implemented targeted strategies to improve financial and operational performance, saving approximately $8 million this fiscal year and $50 million in the next fiscal year.
“S & P noted that CMC’s balance sheet “provides sufficient cushion at the lower rating level” and cites “management’s turnaround plan” as a stabilizing factor. Both Moody’s and S & P recognize the work being done at CMC and the extensive financial improvement plan underway,” Montenegro said.