The system also said in an earnings report posted for bondholders that it incurred $17 million in costs related to the merger. Its cash and cash equivalents remained nearly unchanged at $709.7 million.
After Trinity released its results Tuesday, Moody's Investors Service affirmed the rating on the obligated group's debt, but revised its outlook from stable to negative. It also upgraded the rating on CHE's long-term debt to Aa2 to match Trinity's.
The agency previously said the merger would be credit-positive for Catholic Health East, but credit-negative for Trinity, the stronger of the two parties.
Moody's analysts highlighted a number of challenges facing the combined organization, including a lack of permanent leadership—the system currently has an interim CEO, CFO and COO—and a below-average ratio of cash to direct debt.
While the merger created a system with strong geographic diversity that isn't overly reliant on any one market, Moody's said Trinity has been slow to divest underperforming assets from Catholic Health East. In addition, it expects the system to take on new debt to fund capital projects.
“The ratings demonstrated that CHE Trinity is positioned well for the future,” said Carol Tingwall, director of communications for the system.
Tingwall added that the system has made strides to divest the underperforming assets in question.
Eastern Maine Healthcare Systems on Friday closed its acquisition of Mercy Health System in Portland, Me., and Prime Healthcare Services is in the process of acquiring St. Michael’s Medical Center in Newark, N.J.
The board of directors also expects to name a CEO by the end of the year, Tingwall added. “Our consolidation really is a journey,” she said.
Follow Beth Kutscher on Twitter: @MHbkutscher