Decatur, Texas-based Wise Health System has been downgraded five notches from "BB+" to "B-" as it continues to suffer from operating losses that are only likely to worsen in the near term, S&P Global said Sept. 15.
A three-hospital system, Wise Health is the target of Nashville, Tenn.-based HCA Healthcare subsidiary Dallas-based Medical City Healthcare. The outlook is negative.
"The rating action reflects our view of Wise's escalating operating losses, with a negative 21% operating margin in the six-month interim period, which have produced negative cash flow and continue to erode unrestricted reserves at an unsustainable rate," said S&P Global Ratings credit analyst Concy Richards.
The threat of further deteriorating losses, if sustained, may result in eventual default, S&P warned.