CHICAGO - Illinois-based Presence Health finalized a deal to sell a hospital that has strained the system's books with losses.
Presence Health said in a statement that its hopes to close on the sale of Our Lady of the Resurrection in Chicago to Community First Healthcare of Illinois Inc., which was formed to purchase the hospital, before the end of the year.
The two originally announced the sale plans earlier this year but a period of due diligence followed. Presence announced that Community First Healthcare has now signed a definitive sale agreement which calls for it to operate the facility as an acute care hospital and invest $20 million over the next five years to upgrade the facility and its programs.
Moody's Investors Service in May downgraded Presence Health's $580 million of debt one notch to Baa2 and assigned a stable outlook. Presence, the organization formed through the merger of Resurrection Health Care and Provena Health, consolidated the debt of the two last year. The sale is expected to help curtail losses that impact the larger system's books.
"The downgrade to Baa2 from Baa1 reflects sizable volume declines for two consecutive years contributing to a sharp decline in operating performance in fiscal year 2013, with operating losses that exceeded management expectations," Moody's wrote in May.
"The downgrade also incorporates a change in certain core strategies that is suggested by initiatives that may result in the realignment or divestiture of certain ministry assets as management endeavors to stabilize the system's financial platform," the report said.