Fitch Ratings, a financial services company based in New York, has revised a rating for Butler Health System’s $79 million revenue bonds to negative, after the system breached its rolling 12-month debt service coverage covenant with Truist Bank.

Financial results through Dec. 31 suggest that operating challenges persist, and inflationary pressures on labor and supplies are adding financial strain to the system.

Additionally, patient volumes have yet to rebound to pre-pandemic levels, according to a Wednesday, Feb. 22, news release from Fitch.

At this point, Truist has not declared a default for the BHS bond.

“The ratings agency’s report is a straightforward review of the situation and is reflective of the challenges all providers are facing in today’s health care economics,“ Melissa Forster, Butler Health System spokeswoman, said in a statement. ”We are addressing the matter in a prudent and productive manner for the sustained benefit of our new organization.“

Before finalization of the Butler/Excela transaction in September, Fitch placed BHS' bonds on “Rating Watch Evolving.” At the time, the specific details of the prospective transaction were not final, but Fitch viewed the agreement as a credit positive, with potential upside for the outlook or rating, the news release said.

BHS, a community hospital system, offers select higher-end services in Western Pennsylvania, with 53 outpatient care sites in its network, including four urgent care clinics.

For the six months ending Dec. 31, 2022, BHS had approximately $227 million in operating revenues.

Operating revenues at fiscal year 2022 were $472 million, the news release from Fitch said.