The downgrade to ‘AA-‘ reflects Texas Children’s material underperformance in profitability driven by multiple factors, including weaker than expected volumes in the Houston market, a delayed opening of the new Austin inpatient facility and operating headwinds faced by the health plan. These factors contributed to the operating income loss of approximately $198.1 million (negative 6.4% operating margin and negative 3.1% operating EBITDA margin) through the first six months of FY24. Fitch Ratings does not expect Texas Children’s to meet its obligated group debt service coverage covenant at FYE24.
Wed 17 Jul, 2024