Hannibal (Mo.) Regional Healthcare System's rating was downgraded to "BBB-" from "BBB+" by Fitch.
The downgrade is driven by persistently high expense growth that has led to a $7.5 million operating loss (-2.6% operating margin) in fiscal 2024, Fitch said in an Oct. 29 report. The system's days of cash on hand fell from 84 on Sept. 30, 2023, to 66 on Sept. 30, 2024.
"This level of liquidity is viewed as weak and risk additive, indicating that HRHS has limited financial flexibility and cushion to weather future operating challenges, which Fitch views as likely in FY 2025 due to the organization's planned Epic go-live," the ratings agency said.
The system has a negative outlook with Fitch. The rating agency said a further downgrade is likely if the system is unable to turn around operating profitability or maintain balance sheet stability.