As ProMedica Health System surpassed $2.6 billion in operating lease obligations, with $2.3 billion of bonds and capital leases, Moody's Investors Service downgraded ProMedica's investment rating for the second time in a matter of months as concerns continue to escalate regarding ProMedica's financial health. Analysts are concerned that this steady pattern of ratings downgrades suggests that ProMedica is at risk of default. ProMedica Health Systems operates hospitals and provides care to senior citizens in 26 states.
Buyers have lost 42% of their investment in ProMedica from July 2021 to May 2022, while owners of taxable corporate bonds have suffered similar losses. Although it is often in the client's best interest to learn of these downgrades and losses when they occur, brokers often seek to avoid an appearance of being the bearer of bad news, meaning many retail investors may not learn of ProMedica's financial woes until it's too late.
However, when a broker or investment adviser fails to disclose material information to a client, they or their firm may be liable for further harm suffered that could have been avoided had the client received relevant information in a timely manner.
One of these required notifications refers to ratings downgrades; if you are an investor in ProMedica Health Systems or hold ProMedica bonds and your broker has not informed you of the ProMedica rating downgrades, the broker has likely run afoul of industry rules by failing to make that notification.
Moody's cited ProMedica's "severe losses" experienced in the senior care and nursing home business in recent years, and expressed concerns that bondholder security could be negatively impacted by an increasingly complex strategy employed at ProMedica, which is seeking to fortify its position in exchange for greater complexity and potential risk.
For example, a provision beginning in the Series 2018 A and B bonds allows ProMedica to substitute notes which "could lead to a different security in the future."
If you invested in ProMedica Health Systems, whether through issued bonds or otherwise, and experienced losses or other damages after your broker or representative recommended purchase of ProMedica securities, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.