Fitch Ratings said it has downgraded the credit rating of $50.7 million in state bonds issued three years ago on behalf of New London’s Lawrence + Memorial Hospital because of the care provider’s three-week labor strike late last year.
The strike, which has since been resolved, cost an estimated $14.3 million, Fitch said, which has hurt L+M’s profitability. Fitch downgraded the bonds from ‘A+’ to ‘A’.
The hospital posted a negative 4.7 percent operating margin for the nine months ended June 30. Without the strike, the hospital would have break even, Fitch said.
The ratings agency also revised the hospital’s outlook from ‘negative’ to ‘stable.’
That change is based on Fitch’s expectation that the hospital’s balance sheet will continue to stabilize this year, and return to a positive margin over the next two years. That’s partly due to L+M’s acquisition of Westerly Hospital in Rhode Island last year. Westerly, once in the red, has had a positive operating margin since the acquisition, Fitch said.
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