Tower Health reported a $27 million operating loss for the first nine months of fiscal 2024
Tower had a smaller loss, but still incurred losses in its unrestricted financial reserves.
Tower Health reported a $27.4 million operating loss for the nine months that ended March 31, compared to a $122.8 million loss in the same period a year ago, the Berks County-based nonprofit health system told investors Thursday.
“Throughout fiscal year 2024, we have met or exceeded our financial and growth goals, and we are confident we will achieve our projected return to profitability by the fiscal year end,” Tower said in a statement.
However, the reduction in losses did not help Tower’s cash reserves. That closely watched measure continued declining in the quarter, to the equivalent of 30 days of operating expenses on March 31 from 32 days at the end of the year.
That level of reserves is extraordinarily low for a health system with roughly $1.5 billion in long-term debt, including leases that are similar to debt. The low reserves were a key factor in what Standard & Poor’s described as Tower’s “extremely weak financial profile” when it downgraded Tower’s credit rating by one notch to CCC this week.
Here are the highlights from Tower’s financial report:
Tower Health’s revenue
Tower’s revenue was $1.43 billion in the first nine months of fiscal 2024, up 2.6% from $1.39 billion last year, which still included six months of Chestnut Hill Hospital’s results. Excluding Chestnut Hill’s revenue last year, Tower’s revenue gain was 7.8%. Temple University Health System and two partners bought Chestnut Hill for $28 million on Jan. 1, 2023.
Tower Health’s operating profit
While Tower’s operating loss through March 31 was significantly lower than last year, it benefited this year from a cash infusion of $19.5 million from a federal drug settlement that was partially offset by a $9.6 million impairment charge. Those items were recorded in the quarter that ended Dec. 31.
Revenue at Phoenixville and Pottstown Hospitals also climbed 7.2% to $250.9 million from $234 million, Tower told investors. Operating income, however, remained stuck at about $40 million in both years.
Notable at Tower Health
Tower and Cigna agreed to a contract effective May 1 that returned Tower to an in-network provider for people with Cigna health insurance. Cigna and Tower had reached an impasse in November, which resulted in Tower being an out-of-network provider for Cigna members starting Jan. 1.