Relevant Document:
Quarterly Disclosure
ProMedica Municipal Bonds Update from Reorg's Americas Municipals team.
ProMedica registered an operating loss of $155.1 million for the three months ended June 30, compared with an operating loss of $8.7 million in the same period a year earlier, the Ohio-based healthcare organization reported in an unaudited quarterly disclosure posted to EMMA on Monday, Aug. 15. The company stated that the losses were primarily driven by labor costs as industrywide workforce shortages resulted in increased amounts of agency staffing in the senior care and provider divisions.
Total operating revenue of $1.4 billion for the second quarter decreased 21.8% compared with the prior-year period, primarily driven by reduced revenue in the insurance division after the sale of the Paramount Advantage Medicaid business. Net patient service revenue for the second quarter of 2022 was comparable to that of the prior-year period. ProMedica also received and recorded $6.7 million of CARES Act and other government stimulus income in other revenue during the second quarter, compared with $13.9 million recorded in the prior-year period.
The second-quarter results brought the six-month operating loss to $281.1 million, compared with an operating loss of $77.9 million for the January-through-June period a year earlier. Total operating revenue of $3 billion for the first half of 2022 decreased 12.4% compared with the prior-year period. Debt service ratio coverage was 2.11x, above the 1.10x covenant but less than the 2.62x reported as of Dec. 31, 2021.
As of June 30, ProMedica had $1.6 billion of unrestricted cash and investments to fund operational and capital expenditures. This equates to 88.7 days’ cash on hand as of June 30, 2022, as compared with 108.6 days as of Dec. 31, 2021. ProMedica is covenanted to have at least 45 days’ cash on hand.
The ProMedica obligated group sustained credit ratings downgrades by
Fitch and
S&P Global Ratings during the second quarter; the two agencies and Moody’s maintained negative outlooks. Subsequent to the end of the quarter, on Aug. 9, S&P again
lowered the system’s rating to BB and placed it on creditwatch with negative implications, stating that “further deterioration in the financial profile, particularly unrestricted reserves and operating margins, could result in another downgrade.” S&P said future rating actions will also be based on its assessment of management's near-term strategic and operational plans.
Serving communities in 28 states, ProMedica operates 11 owned acute care hospitals in Ohio and Michigan, a health plan, a physician group and 332 senior care locations including assisted living and memory care facilities, skilled nursing and rehabilitation centers, and hospice and home healthcare agencies.
The system’s revenue bonds have a joint and several pledge of gross revenue of the obligated group, which consists of the following corporations: Toledo Hospital, Flower Hospital, ProMedica Continuing Care Services, Bay Park Hospital, Defiance Hospital, Fostoria Hospital, Fremont Hospital, Monroe Hospital, Bixby Hospital, Herrick Hospital, Provincial House and HCR ManorCare Inc. These corporations accounted for approximately 33% of system revenue for the six months ended June 30.
Total debt, including finance leases, was $2.3 billion as of both June 30, 2022, and Dec. 31, 2021. The total debt-to-capitalization ratio was 55% as of June 30, 2022, and 49% as of Dec. 31, 2021. As of June 30, the total outstanding debt was 96% fixed and 4% variable.