Tower Health, owner of Pottstown Hospital, saw its bonds downgraded to “junk” status by two major credit-ratings agencies last week, writes Harold Brubaker for The Philadelphia Inquirer.

Standard & Poor’s and Fitch Ratings slammed the nonprofit healthcare system with the downgrade to BB+ rating after Tower reported over $550 million in operating losses for the two years ending June 30. The two agencies declared Tower in a “precarious financial position” and added it “faces a difficult path to recovery.”

The Reading-based nonprofit has also seen its unrestricted financial reserves fall by $240 million over the last two years, with more losses expected for the fiscal year ending next June.

Three years ago, Tower made a risky, debt-fueled expansion by purchasing five community hospitals in Southeastern Pennsylvania, including the one in Montgomery County and three in neighboring Chester County, from Community Health Systems. This was compounded when COVID-19 hammered the already strained health systems’ finances.

Tower also bought St. Christopher’s Hospital for Children out of bankruptcy for $50 million in a joint venture with Drexel University.

“These investments have failed to show meaningful financial progress and continue to be a drain on overall system performance,” said S&P.

Read more about Tower Health at The Philadelphia Inquirer by clicking here.

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