The downgrade reflects Moody’s expectation that days cash on hand will be sustained at historically low levels of around 130 to 150 days, the ratings agency said in a Feb. 10 report. The downgrade also reflects expectations that operating cash flow margins, while improved, will remain around 1% to 3% for the next two years.
Moody’s said the system has “several enduring strengths,” including a leading statewide market share in both healthcare delivery and its health plan, the largest physician group in the state, and its status as the state’s second-largest private employer.
New Mexico’s new directed payment program will provide the system with about $300 million annually, with $200 million benefiting its 2025 bottom line, according to the report. Cash from this program, along with a one-time FEMA grant, is likely to help restore days cash on hand up to 150 days.
Moody’s said the system has also seen other positive developments, including significantly improved labor costs and $200 million in improved pricing for its Medicaid health plan in 2025. Its Santa Fe hospital also posted a positive operating income for the first time since opening.
“Nevertheless, operations will remain under pressure from ongoing high medical cost trends, inflation, a tight labor market, and competition,” Moody’s said.
Presbyterian Healthcare Services has a stable outlook at its new rating.
