Tower Health Secures $142.5 Million in Refinancing Deal to Boost Cash Reserves and Ease Bond Redemption Concerns

Tower Health has reached a major refinancing deal that will provide the nonprofit with $142.5 million in additional cash for daily operations. This agreement also eliminates a series of bond redemptions through 2029. The first repayment, which was originally due in February for $64.6 million, has been postponed. In addition, bond redemptions scheduled for February 2027 and February 2029 have also been delayed.

This gives Tower Health more time to recover financially from a major expansion into the Philadelphia region three years before the COVID-19 pandemic hit. Despite reporting an operating loss of $27.4 million for the nine months ending March 31, compared to a $122.8 million loss in the same period the prior year, Tower’s cash reserves did not improve. Cash reserves, a key metric, dwindled from 32 days of operating expenses at the end of the year to 30 days on March 31.

The additional $142.5 million in proceeds from the refinancing deal will nearly double Tower’s cash reserves, which were reported at $153 million on March 31. This injection of cash comes at a critical time, especially after credit agency Standard & Poor’s downgraded Tower’s credit rating to CCC last month due to concerns about the nonprofit’s ability to meet the upcoming bond redemption in February.

Tower Health expressed gratitude for the overwhelming support from its bondholders for this agreement, calling it a powerful endorsement of their financial recovery plan despite facing financial challenges after acquiring five struggling community hospitals and expanding into the competitive Philadelphia market