According to a recent report from Standard & Poor’s Ratings Services, healthcare organizations within the speculative grade group — having a rating of “BB+” or lower is considered speculative grade, or junk level — face tough fiscal challenges and “have a markedly weaker financial profile than investment-grade credits.”
Here are 13 statistics on hospitals with junk-level credit ratings. Note: Data are based on 35 speculative-rated hospitals in S&P’s portfolio. All statistics are medians from fiscal year 2012.
Hospitals in S&P’s speculative grade category
Net revenue: $136.5 million
EBIDA: $7.9 million
Salaries and benefits as a percentage of net revenue: 55.2 percent
Operating margin: 0.4 percent
EBIDA margin: 6.3 percent
Excess margin: 0.9 percent
Maximum annual debt service coverage: 1.8x
Cushion ratio: 5.9x
Cash on hand: 85.4 days
Accounts receivable: 48.5 days
Average age of plant: 12 years
Long-term debt/capitalization: 47.9 percent
Defined benefit pension funded status: 62.6 percent
More Articles on Hospital Credit Ratings:
EHRs and Health IT Projects: Are They Battering Hospitals’ Financial Profiles?
Fitch: 2014 Does Not Look Good for Nonprofit Hospitals
12 Hospitals S&P Has Lowered to Speculative Grade
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