Pat Mathews, Jackson’s interim chief financial officer, didn’t respond to a request for comment. Jackson bonds with a 4% coupon, maturing in 2036 last traded at about 53 cents on the dollar on Aug. 27.
Since the pandemic, the healthcare sector has been slammed by a shortage of caregivers and elevated wage and supply costs. Although labor challenges are easing, median operating margins for hospitals rated by Fitch Ratings are only slightly positive at 0.4% using audited 2023 data. Hospitals that treat older and poorer populations and that depend more on government reimbursements continue to struggle.
In the last few months, both Moody’s Ratings and S&P Global Ratings downgraded Jackson Hospital deeper into junk, saying the hospital was bleeding cash. S&P on Wednesday downgraded the bonds to D on the missed payment from CC.
“We understand, based on limited public and unaudited financial statement data, that Jackson’s liquidity is very thin and likely insufficient to meet the bondholders demand for full payment,” S&P said in an Aug. 13 news release.
As of Aug. 12, Jackson hadn’t produced audited financial statements for the fiscal years ended Dec. 31, 2022, and Dec. 31, 2023, S&P said.
Jackson’s board of trustees in June approved an affiliation agreement with HumanityCorp, a private equity firm, according to a filing by Regions Bank, which was replaced by UMB as bond trustee in July. HumanityCorp’s website says it enables non-profit hospital systems to convert back office cost centers into financial assets, while generating attractive returns for investors.
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