Brewer, Maine-based Northern Light Health, which in January agreed to transfer 1,400 of its employees to health services company Optum, had its outlook downgraded to negative from stable amid weak operating results in recent years, S&P Global said Feb. 15.
The rating agency maintained a "BBB" rating on various bonds Northern Light has. Management has initiated a number of initiatives that should strengthen the system's financial profile and make such a rating robust, S&P said.
A further downgrade, however, cannot be ruled out in the future.
"The negative outlook incorporates our view of persistent operating losses and meaningfully weaker unrestricted reserves that provide limited flexibility during this period of earnings and cash flow stress," S&P said. "Without NLH demonstrating a trend of financial improvement, we view a downgrade as possible. In addition, the success of management's turnaround efforts and new partnerships will be key rating factors."
Northern Light Health reported a $178 million loss in fiscal 2022.