Redeemer Health gets a two-notch credit rating downgrade from S&P, reflecting years of losses
The S&P downgrade followed a similar move by Fitch in June.
![Holy Redeemer Medical Center, in Meadowbrook, Montgomery County.](https://www.inquirer.com/resizer/dawlkkzxbljbaqc9Ba5cirKEZlg=/760x507/smart/filters:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/pmn/TB7MSD5XMVGY3ME5YKDL7CXMVU.jpg)
Standard & Poor’s has downgraded the credit rating of Redeemer Health by two notches, to ‘B+’ from ‘BB,’ citing years of losses that have significantly weakened the nonprofit’s balance sheet.
The new rating means that S&P considers Redeemer to be financially vulnerable, though it is still capable of meeting financial obligations.
The downgrade also reflects S&P’s expectation that Redeemer, based in Montgomery County, did not meet the profitability requirement in its bond agreements in the fiscal year ended June 30. If that’s the case, Redeemer will have to hire a consultant to look for ways to improve its finances.
Redeemer had $130 million in long-term debt at the end of March. Its operating loss in the first nine months of fiscal 2024 was $34 million, down slightly from a $37 million loss in the same period of fiscal 2023. The organization hasn’t had an annual operating profit since fiscal 2016, when it had a tiny $956,000 operating profit.
The S&P downgrade on July 16 followed a similar downgrade by Fitch in June. Redeemer’s unrestricted financial reserves fell to $115 million on March 31 from $220 million three years earlier, Fitch noted.
In an effort to improve its finances, Redeemer said it is negotiating better rates from insurers to balance out higher labor and other costs. It’s also reducing costs by preparing to sell two home-care offices that are outside its core Philadelphia and South Jersey markets.
Greg Wozniak succeeded longtime CEO Michael Laign at the helm of Redeemer last week.
In addition to a 260-bed hospital in Meadowbrook, Redeemer owns two nursing homes, other senior-care facilities, and a hospital and home-care business that serves customers in Pennsylvania and New Jersey.