Fitch Ratings downgraded NCH Healthcare System's issuer default rating to BBB-plus from A-minus, citing weak operating results, limited internally generated cashflow, high leverage and ongoing capital needs.
The rating now has a stable outlook.
NCH is expected to bring $112 million in Series 2026A and 2026B bonds to market the week of Feb. 16, according to Fitch Director Richard Park.
"Fiscal 2025 operating performance remained weak, with a negative 2.9% operating margin and a 3% operating earnings before interest, taxes, depreciation and amortization margin," Fitch said. "Fitch views the recent improvement trend favorably, given tighter labor management and revenue cycle progress." The agency said it expects NCH to move toward breakeven in fiscal 2026.
The ratio of capital expenditures to depreciation was high in fiscal 2025 at 302%. NCH expansion plans include the recently opened HSS at NCH facility at the north campus and the under construction R.M. Schulze Family Cardiovascular and Stroke Critical Care Center.
Fitch said liquidity is moderate for the rating level, with 108 days of cash on hand as of June 30, 2025. Leverage will be elevated following the bond offering. The agency expects cash-to-adjusted debt to remain in the mid-80% range in the near term.
Fitch said NCH has a market share of 60% for inpatient services in its primary service area in and around Naples, Florida. The Collier County population has grown 7% in the past five years. Fitch expects further immigration to the county.
Patients used Medicare to pay 59.7% of fiscal 2025 gross revenue, which Fitch indicated was an elevated portion.
NCH has several hospitals, urgent care, and emergency care centers in Naples and Bonita Springs on Florida's southwest coast.
NCH had $317 million in debt outstanding as of Sept. 30, 2025, according to Fitch.
NCH isn't rated by S&P Global Ratings. It couldn't be immediately determined if it is rated by Moody's Ratings or KBRA.
NCH didn't immediately respond to a request for a comment.
