Moody's Ratings downgraded Northern Hospital District of Surry County of North Carolina to Caa1 from B2 Thursday on reduced liquidity.
"The downgrade to Caa1 reflects NHSC's rapid cash deterioration and inability to stem operating cash flow losses amid a prolonged period of severe financial stress," Moody's said.
The outlook on the rating remains negative.
The healthcare organization had 30 days' cash on hand as of March 31, significantly below Moody's expectations and below the 46 days' cash held at the end of fiscal year 2024.
Though the organization expects to get a $15 million grant from the state but its use would be restricted to capital needs or retirement of debt, Moody's said.
"NHSC is unlikely to meet service coverage covenant requirements at fiscal year-end 2025, under both the master trust indenture and bank agreements, which could result in acceleration," Moody's said.
"The negative outlook reflects the risks of further cash deterioration as cash flow losses continue and debt payments and other payables come due, the confluence of which increases the risks of a default, bankruptcy filing or liquidation," Moody's said.
S&P downgraded the
The organization had $29 million of debt outstanding as of the end of fiscal year 2024.
Northern Hospital District of Surrey County did not immediately respond to a request for a comment.
