Moody’s downgraded Norman (Okla.) Regional Health System’s rating to “Caa2” from “B1.”
Five things to know:
- The lowered rating reflects that the system has no financial flexibility, with weak liquidity of 15 to 20 days cash on hand, Moody’s said in an April 9 report. Cash is entirely reliant on a fully drawn bank line, which increases the likelihood of default and a low recovery value.
- Moody’s said the system has possible additional sources of liquidity over the next month, including the sale of a business unit and the receipt of supplemental payments.
- Norman Regional’s next debt service payment of about $11.6 million is due in August, according to the report.
- Moody’s said that higher-than-expected labor costs and additional capital spending will continue to challenge Norman Regional’s margins and liquidity. The system has engaged a consultant to identify margin improvement opportunities, but Moody’s said execution is likely to take time.
- Norman Regional has a negative outlook at its new rating, reflecting the possibility of further liquidity erosion if the system’s management is unable to quickly achieve targeted margin improvements.
At the Becker's 11th Annual IT + Revenue Cycle Conference: The Future of AI & Digital Health, taking place September 14–17 in Chicago, healthcare executives and digital leaders from across the country will come together to explore how AI, interoperability, cybersecurity, and revenue cycle innovation are transforming care delivery, strengthening financial performance, and driving the next era of digital health. Apply for complimentary registration now.
