Standard & Poor’s Global Ratings upgraded Northern Light Health’s financial outlook from “negative” to “stable,” citing the organization’s “robust turnaround” and its strong position as a key rural health care provider in northern and central Maine.
The revision reflects improved fiscal 2025 underlying performance ahead of budget results through the first quarter of fiscal 2026, with both periods showing positive cash flow, the New York-based agency said in its April 15 research update.
“This is good news that a rating agency like S&P has recognized that the efforts we are taking to address significant financial headwinds are moving our health care system in the right direction,” Northern Light Health CFO James Rohrbaugh said in a news release.
Guy Hudson became president and CEO of Northern Light Health last October, chosen by the board of directors for his “proven record of leading financial turnarounds in hospital systems.” The appointment came as Medicaid funding cuts put a strain on hospitals and health systems nationwide.
Northern Light’s financial pressures have included the May 2025 closure of Northern Light Inland Hospital and associated services in Waterville amid monthly operating losses of $1 million to $1.5 million.
‘Robust turnaround’
In its latest ratings action, S&P cited Northern Light Health’s “robust turnaround plan” and better-than-expected fiscal 2025 performance, saying the system had “meaningfully” reduced its operating loss to near breakeven and generated sufficient cash flow to meet its debt service coverage covenant.
Northern Light Health said that its financial turnaround plan has reduced operating losses from $156 million in fiscal year 2024 to $15 million in fiscal year 2025, it said in a statement.
Other positives noted in S&P’s report included Northern Light Health’s reduced reliance on contract labor, reduced staff turnover rates and increased recruitment of nurses.
Challenges
The ratings agency noted that Northern Light Health has challenges that include weak unrestricted reserves and a constrained payer mix, including a reliance on governmental payers, but said that improving volume trends and asset diversification are positives.
Management is projecting another operating loss in fiscal 2026, although through the first quarter, Northern Light Health is ahead of budget, the agency said in its report.
“Although earnings continue to be negative and we view some volatility as consistent with the rating level, the outlook incorporates expected improvement in earnings over the next several years to around breakeven,” the agency said.
S&P cited Northern Light’s “strong enterprise profile” as contributing to the improved rating and signaled that it could revise the outlook to positive under certain conditions.
Northern Light Health, Maine’s second-largest health system, is anchored by Eastern Maine Medical Center in Bangor and the smaller Mercy Hospital in Portland, which serves a larger population in southern Maine.
Northern Light Eastern Maine Medical Center was ranked No. 2 among Maine’s largest hospitals in the 2026 Mainebiz Book of Lists, based on the number of licensed acute care beds. It has 411 beds and 3,917 employees.
