S&P Global Ratings lowered its long-term rating on Nacogdoches (Texas) County Hospital District nine notches to "B-" from "A-."
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.