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These Healthcare Companies Have Filed for Chapter 11 Bankruptcy

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These Healthcare Companies Have Filed for Chapter 11 Bankruptcy

These Healthcare Companies Have Filed for Chapter 11 Bankruptcy

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In the last several months, Chapter 11 bankruptcy has become popular as it has become many companies’ go-to form of bankruptcy. Unlike Chapter 7 bankruptcy, Chapter 11 involves court-supervised reorganization of a debtor’s assets and liabilities.

Such bankruptcies have been common for many businesses, from food service to health services. Today, however, we will focus on the healthcare companies that filed for Chapter 11 in the past year.

Why There Are So Many Filings for Chapter 11 Bankruptcy

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Bankruptcy filings in the healthcare industry have seen an increase in recent years. According to Gibbins Advisors, 25 companies filed for bankruptcy in 2021, and 46 more filed in 2022.

By 2023, that value had risen to 79, marking the highest number of the decade. As 2024 progresses, the numbers are already starting to rival previous years, signaling nothing has changed in the U.S.

Acorda Therapeutics

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Acorda Therapeutics is a celebrated biotech firm known for pioneering treatments to combat Parkinson’s and Multiple Sclerosis. Sadly, on April 1, 2024, the company filed for Chapter 11 bankruptcy.

The move was part of an asset purchase agreement with Merz Therapeutics, a German-based group that manufactures medications to treat movement disorders.

Cano Health

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Cano Health once reported over $1 billion in assets and liabilities, but surprisingly, it filed for Chapter 11 bankruptcy on February 4, 2024. The move came three years after the healthcare company went public with its $4.4 billion SPAC merger.

Unfortunately, the announcement did not shock many, as the company was subject to mismanagement over the last few years.

Rite Aid

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Rite Aid also filed for Chapter 11 bankruptcy on October 15, 2023. The company named Jeffrey Stein, its CEO and chief restructuring officer, as it attempted to discharge its $3.45 billion debt. Rite Aid also plans to shut down “underperforming” stores across the U.S. At this time, the company has 2,100 stores in operation.

GenesisCare

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GenesisCare is a cancer and cardiac care provider that filed for Chapter 11 bankruptcy in June 2023. The company has 5,500 employees and operates in several countries but will undergo an intense restructuring process as a result.

The company will also try separating the U.S. business from its businesses in Australia, Spain, and the U.K., creating two platforms.

Envision Healthcare

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Envision Healthcare is a physician staffing firm that operates out of Nashville. It filed for Chapter 11 bankruptcy in May. The company is now restructuring its $7.7 billion debt with the support of more than 60 percent of its key stakeholders.

Pear Therapeutics

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Pear Therapeutics, a digital health company, filed for Chapter 11 bankruptcy on April 5 and laid off 170 employees, approximately 92 percent of the company’s workforce. Pear Therapeutics CEO Corey McCann was among those who were laid off. Only 15 employees were retained as part of a “transition” team to look after the sale of the company’s assets.

Compass Medical Group

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Compass Medical Group used to have offices and clinics in Boston, but it filed for Chapter 11 bankruptcy in May 2023. It happened suddenly, leaving thousands of patients confused and without a healthcare clinic. “It is with our deepest regret and great sadness to inform you of our imminent plan to close our practices,” the company said on its website.

Mercy Iowa City

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Mercy Iowa City filed for Chapter 11 bankruptcy in April 2024, which will include a “liquidation analysis.” The filing referenced a letter of intent between Mercy Iowa City and the state of Iowa that outlines a plan to transition the hospital to become part of UI Health Care. However, major bondholders were not pleased with the facility’s $20 million valuation and hoped for more money in the bidding process.

Trinity Regional Hospital Sachse

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Trinity Regional Hospital Sachse in Texas filed for Chapter 11 bankruptcy after being active for two years. The hospital has defaulted on around $70 million of municipal bonds issued in 2020.

The hospital’s owner listed assets of $ 50 million to $100 million and liabilities of $100 million to $500 million on the bankruptcy petition as they struggled to find a buyer.

American Physician Partners

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American Physician Partners is a medical staffing company based in Brentwood, Tennessee. It filed for Chapter 11 bankruptcy protection in September 2023, announcing its closure in July. The company then transitioned its 150 hospitals and health system clients to other emergency medicine staffing firms or insourced services within the organization.