CHICAGO – Presence Health, one of the Chicago area's largest not-for-profit systems, is under review for a downgrade as Moody's Investors Service digs into its fiscal 2015 results.
At the Baa2 level, the system and its $503 million of rated debt have only one notch to move downward while retaining an investment grade level rating.
Moody's said its review stems from the recent disclosure of a write down of receivables.
"Presence's failure to post timely quarterly financial statements for the period ended December 31, 2015, as required by its continuing disclosure agreement, signals that there may be a negative variance to performance estimates for fiscal 2015," analysts wrote in the action published Thursday.
The review will focus on Presence's quality of earnings, demonstration of internal accounting controls and processes. The review will also factor in the system's compliance with bond covenants and liquidity, debt burden, and management strategy.
Moody's in May 2014 downgraded Presence Health one notch to its current level. Presence, the organization formed through the 2011 merger of Resurrection Health Care and Provena Health, consolidated the debt of the two in 2013.
The downgrade was due to sizable volume declines for two consecutive years contributing to a sharp decline in operating performance and operating losses that exceeded management expectations. It also incorporated a change in some core strategies as management seeks to stabilize the system's financial platform, Moody's said at the time.
Later in 2014, Presence finalized a deal to sell one of its Chicago hospitals that had been straining the system's books with losses. Presence transferred the hospital to Community First Healthcare of Illinois Inc., which was formed to purchase the hospital.
Presence operates nearly a dozen hospitals primarily in the Chicago area although its reach extends to other markets including Joliet, Kankakee, and east central Illinois. It's the second largest hospital chain in Illinois and the largest Catholic system.
