Fitch lowers Community Health Systems

Fitch Ratings said it downgraded the long-term issuer default rating of Community Health Systems, Inc. and its subsidiary CHS/Community Health Systems, Inc. (CHS) to CCC+ from B-. The agency also lowered the ratings on the asset-based lending facility and first-lien senior secured notes to B+/RR1 from BB-/RR1, the second-lien senior secured notes to CCC-/RR6 from CCC/RR6, and the senior unsecured notes to CC/RR6 from CCC-/RR6.

“Fitch's downgrade of the IDR to CCC+ reflects reduced EBITDA and FCF estimates for CHS driving our near-term expectation of CHS sustaining Fitch-defined EBITDA leverage above the 7x-8x range appropriate for a B- IDR. While improved volumes and normalizing of temp labor costs helped EBITDA margins rebound from pandemic-driven lows of about 10.5% in 2022 to 11.5%-12.0% in 2023, Fitch now expects more limited progress on margins and FCF, reducing forecasted debt reduction, for 2024-2026,” the agency said in a statement.

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