A prominent debt ratings agency has slashed its rating of the debt of Quorum Health by two levels to the fourth-lowest notch on its 21-point scale.
Analysts at Moody's Investors Service this week said they have growing concerns about Brentwood-based Quorum’s ability to improve its financial performance — the company lost more than $130 million in the first nine months of this year — and complete a program of hospital sales that CEO Bob Fish recently said includes four facilities at this point. On top of that, they also are keenly watching the Quorum team’s transition to a new revenue cycle management system, which didn’t get off to a great start this fall.
“The downgrade reflects the high execution risk associated with these plans, growing concerns over the company's ability to comply with its credit agreement covenant after it steps down in 2020, and rising refinancing risk if operating trends do not significantly improve in the next three to six months,” the analysts wrote, picking up on comments they made two months ago when they lowered their outlook for Quorum.
The Moody’s team, which is seeing its negative outlook even with the lowered debt rating, also say they are looking down the road at the uncertainty involved with Quorum’s need to move out from under a deal that has Community Health Systems, which spun out Quorum in 2016, managing certain technology and other systems. Such a move could come in the next 18 months.
Quorum runs 24 hospitals in 14 states. The company’s shares (Ticker: QHC) were down almost 1 percent Wednesday afternoon to about 69 cents. Six months ago, they were changing hands around $2.