Doylestown Health got a four-notch credit-rating upgrade to B+ from Standard & Poor’s

Standard & Poor’s sharply upgraded Doylestown Health’s credit rating this week, citing the nonprofit system’s stabilized financial reserves, its significantly smaller operating loss in fiscal 2024, and the fact that it managed to avoid defaulting on loan agreements.

The upgrade to B+ from CCC came a week after Doylestown signed a definitive agreement to be acquired by the University of Pennsylvania Health System. That pending transaction was not a factor in the upgrade, but it did influence the S&P’s positive outlook on Doylestown, the ratings agency said.

“We are quite pleased with this outcome, especially given the rating increase is truly a recognition of Doylestown Health’s accomplishments related to debt structure and operational improvements,” Doylestown’s CFO Elizabeth Seeber said in an email.

Doylestown is expecting to break even in the fiscal year that started July 1, with more than 5% growth in patient revenue. It reported $420 million in patient revenue in fiscal 2024, up from $380.5 million the year before.

Despite the improvement in Doylestown’s finances, S&P still views the organization as highly vulnerable, and its balance sheet “remains modest in our view as the hospital has very limited cushion for unforeseen events.”

Doylestown had $86 million in unrestricted cash reserves on June 30. That was an improvement over $71.4 million 12 months earlier, with the gain coming primarily from the sale of the Pine Run retirement community. Net proceeds from that sale were $76 million, some of which was used to pay off debt.

At the end of fiscal 2021, Doylestown had $132 million in cash reserves. Based in Bucks County, it is poised to become Penn’s seventh hospital, pending regulatory approvals.