Nuvance Health dinged with credit downgrade, could face another

0
29


If a pandemic, an estimated $75 million accounting discrepancy and a lawsuit from a former C-suite executive weren’t enough, Nuvance Health is now digesting a credit downgrade and facing a second.

S&P Global Ratings recently announced it is placing the LaGrangeville, N.Y.-based health system on CreditWatch with negative implications, which means there is at least a one-in-two chance of a downgrade within the next 90 days due to its “opinion of financial deterioration.” Moody’s Investors Service went a step further and downgraded Nuvance’s bond rating from A3 to Baa2 with a negative outlook in late June.

Nuvance did not respond to a request for comment. Both S&P and Moody’s cited the system’s continued failure to produce its audited financials for the year ended Sept. 30, 2019. The health system has delayed the filing while it investigates an estimated $75 million overstatement of patient accounts receivable by legacy Health Quest, the system that merged with Western Connecticut Health Network in April 2019 to form Nuvance.

Moody’s explained its downgrade was prompted by Nuvance’s “material, unexpected drop in performance” following merger-related challenges that cropped up before the COVID-19 pandemic. Changes to leadership and an uncertain financial trajectory were further exacerbated by the suspension of elective procedures during the pandemic, Moody’s said.

“While CARES Act grants will partially offset the financial impact of the outbreak, Nuvance will be challenged by weakening cash flow that is likely to result in cash burn until merger synergies and financial improvement initiatives are realized,” Moody’s wrote.

S&P cited Nuvance’s $51.4 million operating loss in the interim period ended June 30, 2020. Similar to Moody’s, S&P said Nuvance had posted weaker than expected financial results even before the pandemic hit, which puts the health system in a worse position to weather the storm.

Nuvance’s former chief information officer sued the health system in June, claiming he was improperly fired and blamed for the accounts receivable overstatement the health system is investigating. The judge in that case is giving the defendants until August 24 to respond to Robert Diamond’s complaint, a deadline that was extended from July 9. An attorney for the defendants argued in a July 8 letter that his team needed more time to review the allegations to provide a “complete and accurate response.”



Source link

LEAVE A REPLY