West Penn Allegheny Health System is facing some fallout from its $73 million writedown.The SEC decided to look into the hospital's finances after the system announced that it had overstated its revenue by $73 million, including $67 million in patient receivables. This came after the system refinanced $758 million in bonds last year. SEC executives describe it as an "informal" inquiry.
The announcement that West Penn would take the $73 million writedown led to downgraded ratings on the Fitch and Moody's Investors Service. Fitch downgraded the bonds to B minus from B and placed the issue on a negative rating watch.
As we reported previously, the system is already in financial trouble, reporting an operating loss of $15.6 million on revenue of $1.1 billion for the nine months ending in March. Small wonder that the SEC is suspicious of a $73 million credit that may have come just in time for West Penn to float its bond issue successfully.
To learn more about the SEC inquiry:
- read this Pittsburgh Business Times piece
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