Prime Healthcare Services, Inc. Receives Double Upgrade of Credit and Outlook from Fitch Ratings

Upgrade reflects strength of strategic and operational initiatives, decreased leverage and successful repurchase of hospital assets

ONTARIO, Calif.--(BUSINESS WIRE)--Prime Healthcare today announces that Fitch Ratings has upgraded Prime Healthcare Services, Inc.’s (PHSI) senior secured notes to “B+” and upgraded the outlook to Stable.

Prime Healthcare Services includes 30 hospitals, and together with the not-for-profit Prime Healthcare Foundation, the health system includes 44 hospitals and more than 300 outpatient locations in 14 states, serving over 2.6 million patients annually. Prime is one of the nation's leading health systems recognized for its quality, patient safety, and performance.

Fitch noted in their ratings action that the upgrade reflected the improved collateralization stemming from PHSI’s repurchase of 17 previously leased hospitals over the past two years. Fitch referenced the material improvement in PHSI’s rent-adjusted leverage and strategic initiatives and operational improvements that further improve the forecast in 2024.

“Fitch's upgrade of both the Credit and the Outlook is evidence of Prime’s commitment to operational excellence and strategic financial management, which has positioned us for continued growth and stability,” said Steve Aleman, Prime Healthcare's Chief Financial Officer. "We are grateful for the ongoing support of our stakeholders as we navigate these dynamic market conditions."

Fitch Ratings underscored PHSI’s efforts to manage risks effectively and maintain its competitive position in the healthcare industry.

PHSI has been actively managing labor market disruption, which was exacerbated by the pandemic in 2022. Through more efficient use of temporary staff, and the recruitment and retention of full-time labor, PHSI successfully rebounded its EBITDAR margins, with further improvements expected throughout 2024. Fitch Ratings also cited anticipated increased revenue from state Medicaid supplemental payment programs and benefits from an industry-wide upturn in volume growth.

In addition to the upgrade of both the Credit and the Outlook, Fitch also affirmed the Long-Term Issuer Default Rating (IDR) at ‘B” and assigned a new “BB” instrument/recovery rating to PHSI's latest senior secured ABL revolver.

The ratings action represents further recognition of Prime Healthcare's material improvement in operational and financial performance. In April 2024, Fitch Ratings upgraded Prime Healthcare Foundation's Issuer Rating and the Revenue Bond Credit rating to BBB+ while rating the Outlook as Stable for its 14 not-for-profit hospitals in six states. The credit rating upgrade by Fitch was the second credit rating upgrade given by the rating agency to PHF in the last three years.

Prime hospitals are recognized for their clinical excellence, health equity and value. This year, Prime's hospitals received more than 200 clinical quality awards from Healthgrades, and Prime has more Patient Safety Excellence Award recipients from Healthgrades than any other health system for eight consecutive years. Its hospitals have also been recognized among the "100 Top Hospitals" in the nation 69 times by Fortune/PINC AI (formerly IBM Watson Health). In addition, Prime has been recognized by The Joint Commission and National Quality Forum with the prestigious John M. Eisenberg Patient Safety and Quality Award. Prime's mission is to provide compassionate, quality care for all and ensure access for which it has been recognized by the Lown Institute for health equity, value, and clinical excellence.

About Prime Healthcare and Prime Healthcare Foundation

Prime Healthcare is an award-winning health system operating 44 hospitals and more than 300 outpatient locations in 14 states, providing over 2.6 million patient visits annually. It is one of the nation's leading health systems, with nearly 45,000 employees and physicians dedicated to providing the highest quality healthcare. Fourteen of the Prime Healthcare hospitals are members of the Prime Healthcare Foundation, a not-for-profit public charity. Based in Ontario, California, Prime Healthcare is nationally recognized for award-winning quality care and has been named a Top 10 and Top 15 Health System by IBM Watson Health. To learn more, please visit www.primehealthcare.com.

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