Moody’s and S&P Affirmed Credit Ratings with Negative Outlook

Date: 02/16/2023

BREWER, Maine (Feb 16, 2023) – FY 2022 was a challenging year for Northern Light Health. Our situation is not unique, it reflects what is happening in healthcare throughout Maine, across the country, and around the world. So, at a time when many healthcare organizations are being downgraded, Northern Light Health is very pleased that both Standard and Poor’s and Moody’s affirmed our current ratings and revised the outlook to negative. Going forward ratings are Ba1 rating with a negative outlook with Moody’s and BBB rating with a negative outlook with Standard and Poor’s. 

Expenses related to the pandemic exacerbated financial losses. One contributing factor was the ongoing staffing crisis with Northern Light Health paying $116 million in professional fees and predominantly for temporary staffing agency costs above last year. We have been working hard to recruit and retain staff and have relationships with Maine colleges and universities and with recruiting firms around the globe. We also note systemic changes in healthcare expenses. Supply chain costs, including medicines and other supplies all rose due to the pandemic.

Tony Filer, senior vice president and chief financial officer said, “We appreciate that both rating agencies noted Northern Light Health made bold moves to help recover from the losses sustained during the ongoing COVID-19 pandemic. Those moves include selling the outreach laboratory business to Quest Diagnostic, engaging Quest to provide management oversight of lab services for nine Northern Light Health member hospitals and Northern Light Cancer Care, as well as a new strategic relationship Northern Light Health is entering with Optum.” As part of that work, 1,400 employees in the system’s revenue cycle management, information systems, inpatient care management, analytics, project management office and supply chain will become employees of Optum in March of this year. Filer added that robust performance plans have also been activated to achieve financial operating targets.

Both Moody’s and Standard and Poor’s noted that the Northern Light Health bond covenant debt service coverage ratio was below the threshold target and the required response has been accomplished for this year in order to remain in compliance with our debt service coverage obligations. We have prepared a robust budget for fiscal year 2023, that if met, will surpass the debt service coverage ratio, and achieve full covenant compliance.