S&P Global Ratings Affirms Prime Healthcare Credit Rating with a Stable Outlook

S&P Global Ratings, in a 2022 year-end Research Update, affirmed Prime Healthcare Services's B- issuer credit rating and the B- issue-level rating on senior secured notes and issued a stable outlook.

The stable outlook reflects S&P's expectations that Prime will experience an improvement of labor costs, a stabilization of patient volume trends, and continued support from state subsidy programs.

The update shared that the rating action was based on the fact that the company had implemented aggressive expense management controls to lower costs, along with lower rent expense following the successful purchase of nine hospitals, ending leases with Medical Properties Trust (MPT).

"Throughout the industry, increased labor costs have led to a reliance on premium labor during an unprecedented labor crisis in healthcare," said Steve Aleman, Prime Healthcare's Chief Financial Officer. "However, Prime management efforts to proactively implement labor cost strategies to address the challenge have proven successful to date, and S&P's recognition of those efforts is a testament to our dedicated leadership, staff and physicians."

The rating update also noted the expectation for EBITDA and cash flow to materially improve in 2023 as a result of improved volume, decreasing costs and the nearly complete repayment of $346 million of Centers for Medicare and Medicaid advance payments in 2022.

Prime Healthcare and Prime Healthcare Foundation comprise 45 hospitals and more than 300 outpatient locations in 14 states. Prime is one of the nation's premier health systems recognized for its clinical excellence, patient safety and performance. This year, Prime's hospitals received more than 250 quality awards from Healthgrades, and Prime has more Patient Safety Excellence Award recipients from Healthgrades than any other health system for seven consecutive years. Its hospitals have also been recognized among the "100 Top Hospitals" in the nation 66 times by Fortune/Merative (formerly IBM Watson Health). Eighty-six percent of Prime's hospitals earned an "A" or "B" from The Leapfrog Group this rating season, well above the national average. 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.

About Prime Healthcare: As an award-winning health system headquartered in Ontario, California, operating 45 hospitals and more than 300 outpatient locations in 14 states, Prime Healthcare provides more than 2.6 million patient visits annually. It is one of the nation's leading health systems with nearly 50,000 employees and physicians. Fourteen of the Prime Healthcare hospitals are members of the Prime Healthcare Foundation, a 501(c)(3) not-for-profit public charity. Please visit www.primehealthcare.com.

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"Prime management efforts to proactively implement labor cost strategies to address the challenge have proven successful to date, and S&P's recognition of those efforts is a testament to our dedicated leadership, staff and physicians."