The downgrade is a result of the hospital district’s weak operating margins and thin liquidity, which have delayed vendor lease payments. As a result, S&P is questioning the district’s operating viability.
In addition, there is a potential for the hospital to file for bankruptcy in the next year, according to S&P credit analyst Jennifer Garza.
The outlook is negative, reflecting the potential for a Chapter 9 bankruptcy filing.
The district operates Nacogdoches Memorial Hospital, which is licensed for 133 beds.
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