Moody's Downgrades Revenue Bond Ratings for Westchester County Health Care Corporation and Charity Health System

Moody's Ratings has downgraded the revenue bond ratings for Westchester County Health Care Corporation (WCHCC) and Charity Health System (CHS) to Caa1 from B1 due to very weak liquidity and high risks related to refinancing CHS's bullet maturity and renewing bank lines. The downgrade reflects the likelihood of payment default unless significant near-term support is provided by New York State or Westchester County.

Key Takeaways:

• Moody's Ratings downgraded WCHCC's revenue bond rating to Caa1 from B1 due to very weak liquidity, which is increasingly reliant on short-term bank lines and loans.
• The downgrade also reflects high risks related to refinancing CHS's November 2025 bullet maturity, renewing bank lines, and further liquidity drain to complete a large project.
• WCHCC has $1.1 billion in debt, while CHS has $193 million in debt at fiscal year end 2024.
• The negative outlook reflects the risk of further declines in already very weak liquidity from operating stress and capital spending or an inability to refinance CHS's bullet or renew bank lines.
• Factors that could lead to an upgrade of the ratings include material growth in liquidity, sustained higher operating cash flow margins, and demonstrated significant financial support from Westchester County or New York State.
• Factors that could lead to a downgrade of the ratings include a reduction in availability of or inability to renew bank lines of credit, inability to refinance CHS's November 2025 bullet maturity, and increased risk of covenant breach.

Statistics:

• WCHCC has $1.1 billion in debt at fiscal year end 2024.
• CHS has $193 million in debt at fiscal year end 2024.
• The downgrade of WCHCC's bond rating to Caa1 from B1 reflects the likelihood of payment default unless significant near-term support is provided by New York State or Westchester County.

Sources:

• Moody's Investors Service (2024) - Moody's Downgrades Revenue Bond Ratings for Westchester County Health Care Corporation and Charity Health System
• Moody's Investors Service - Not-for-profit Healthcare (October 2024)
• Moody's Investors Service - Guarantees, Letters of Credit and Other Forms of Credit Substitution Methodology (July 2022)