Tower Health Shows Significant Improvement in Financial Performance, Yet Cash Reserves Continue to Decrease

Tower Health reported a significant improvement in its financial performance for the nine months ending on March 31, with a $27.4 million operating loss compared to a $122.8 million loss in the same period the previous year. Despite this, the nonprofit health system’s cash reserves continued to decline, equivalent to 30 days of operating expenses on March 31 down from 32 days at the end of the previous year. This was due in part to approximately $1.5 billion in long-term debt, including debt-like leases, which led to a credit rating downgrade by Standard & Poor’s to CCC.

Despite these challenges, Tower Health’s revenue grew by 2.6% to $1.43 billion in the first nine months of fiscal 2024, with an increase of 7.8% when excluding Chestnut Hill Hospital’s revenue from the previous year. Operating losses were significantly lower this year but were offset by a federal drug settlement cash infusion of $19.5 million and a $9.6 million impairment charge. Revenue at Phoenixville and Pottstown Hospitals also rose by 7.2% to $250.9 million, reflecting strong growth throughout the year.

Tower Health expressed confidence in achieving a return to profitability by the end of the fiscal year, citing meeting or exceeding financial and growth goals throughout the year. The health system also reached an agreement effective May 1 with Cigna that returned Tower to an in-network provider for those with Cigna health insurance after an impasse led to Tower being out-of-network for Cigna members at the start of the year