Struggling Tower Health in Pennsylvania plans debt exchange

Struggling Pennsylvania hospital chain Tower Health plans to exchange current debt and raise additional funds as it pursues a turnaround. 

The system, trustee and bondholders of about $992 million in debt are supporting an exchange of “substantially all” existing bonds, according to a May 31 agreement that Tower Health disclosed last year to CCC and CCC-plus.

But finances are improving, prompting the refinancing backed by “overwhelming” bondholder support, the hospital system said. 

Tower Health said it expects to return to profitability in the current fiscal year after meeting or exceeding financial and growth targets. Operating income has improved by more than $100 million this fiscal year compared to the same period last year. The system saw “significant growth in patient volume across most service lines.” 

The system had an operating loss of about $193 million in the last fiscal year ended June 30.