According to a recent S&P report, healthcare organizations within the speculative grade group — for S&P, having a rating of “BB+” or lower is considered speculative grade — face tough fiscal challenges and “have a markedly weaker financial profile than investment-grade credits.”
Earlier this year, S&P analysts gave a similarly grim picture for all nonprofit healthcare organizations, including health systems and smaller, lower-rated hospitals. Medians for speculative grade hospitals, however, generally show the weakest operating performance with low operating margins and high rates of debt. For example, in 2012, S&P rated 35 providers with speculative grade credit. The median operating margin was 0.4 percent, and the median days cash on hand was 85.4. The median operating margin and days cash on hand for all nonprofit standalone hospitals in 2012 was 2.6 percent and 191.7, by comparison.
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