Fitch said it expected Redeemer's operating losses to continue.Fitch Ratings downgraded the credit rating of Redeemer Health by two notches on Wednesday, to BB- from BB+, citing the nonprofit health system’s years of sizable operating losses that have eroded Redeemer’s financial reserves.
Redeemer’s unrestricted financial reserves fell to $115 million on March 31 from $220 million three years earlier, according to Fitch. If Redeemer’s operating losses continue, as the credit rating agency expects, the Catholic health system’s reserves will continue to decline, resulting in less financial flexibility.
Fitch noted that efforts by Redeemer management to trim operating losses in the year that ends June 30 “have been outstripped by persistently high expenses, elevated length of stay, and continued pressure in the senior-care division.”, Redeemer owns two nursing homes, other senior-care facilities, and a hospital and home-care business that serves customers in Pennsylvania and New Jersey.
Redeemer had a $34 million operating loss in the nine months ended March 31. That was a small improvement compared to $37 million the year before. The organization hasn’t had an annual operating profit since fiscal 2016, when it had a tiny $956,000 operating profit.for its hospital and its physician practices. The effort was viewed in the marketplace as an effort to find a buyer for the hospital, but so far nothing has come of it.