Tower Health posts huge loss for fiscal 2020
Tower Health has officially acknowledged what has long been evident: The hospitals, emergency care centers, and other businesses it bought for at least $ 480 million from 2017 to 2019 are not worth roughly what that the system has paid for.
This is why the Berks County nonprofit, headquartered at Reading Hospital in West Reading, recorded a loss of $ 370.7 million on these companies in its audited financial statements for the year ended in June. 30, which were released on Wednesday.
This depreciation was expected. This leaves the organization grappling with interest and debt payments on businesses that Tower and its auditor, KMPG, consider to be severely compromised or even worthless after failed attempts to sell them.
Tower has not released its financial results for the three months ended September 30. These results will show whether the financial recovery announced by Tower management since March continued over the summer.
The fact that Fitch Ratings upgraded its outlook for Tower from negative to stable last week was positive for Tower. This means that Fitch considers Tower to be “on a more strategically viable path,” the rating agency said.
The depreciation of $ 370.7 million represents the cleaning up of past mistakes.
There were three compartments: an amount for five hospitals purchased in 2017, one for the 19 emergency care centers purchased in 2018, and another for St. Christopher’s Hospital for Children, which Tower purchased in 2019 in joint venture with Drexel University.
Tower paid $ 426 million for Brandywine, Chestnut Hill, Jennersville, Phoenixville and Pottstown hospitals. The depreciation of these hospitals amounted to $ 292.9 million, or nearly 80% of the total. Tower had previously recorded a loss of $ 23.6 million on Brandywine.
The emergency care centers, purchased for $ 24.3 million, were housed in an entity called Tower Health Enterprises. This had a depreciation of $ 26.7 million, which likely included other businesses besides the health centers.
Tower and Drexel paid $ 58 million for St. Chris – not including real estate, which was sold separately and is not rented by them. Tower’s financial statements show a $ 51 million write-down on the North Philadelphia Security Hospital.
Tower said last month that it plans to close Jennersville Hospital in West Grove on January 1 and has a preliminary agreement to sell Chestnut Hill Hospital and at least a dozen emergency care centers in Trinity Health Mid -Atlantic. He is still working to keep Brandywine open and is looking for a way to put St. Chris under a new owner.