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Montefiore Medical Center avoids covenant default and acceleration – Hospital Watch

In Debtwire Municipals13 September 2022 report on Montefiore Medical Center (the borrower), we noted FY21 negative debt service coverage of (0.74x) and that an additional year of coverage under 1.0x would cause an event of default and possible bond acceleration. In our report of 1 December 2022, we indicated—based on a comparison of 3Q22 to 3Q21 financials—that significant financial improvement had occurred. The borrower’s fiscal year ends 31 December.

Based on unaudited results for FY22, Debtwire Municipals calculates—as seen in Table 1— coverage of 1.1x, precluding a covenant default and potential acceleration. The borrower will face continued challenges, as Medicaid contributes 33.2% of its net patient revenue and a recent strike by the New York State Nurses Association resulted in pay hikes and higher staffing ratios. Please see our report of 13 January for additional details.

Utilization trends are mostly positive, as indicated in Table 1.

Sample trade data for the Series 2020A tax-exempt and Series 2020B taxable bonds are presented in Table 2 below.

Bonds are secured by a pledge of gross receivables and by mortgages on most of the borrower’s main campus and two parking garages.

Bond ratings are noted in Table 3 below.

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