Why Are So Many Companies Filing for Chapter 11 Bankruptcy
Bankruptcy filings in the healthcare industry have significantly increased in recent years. According to Gibbins Advisors, 25 companies filed for bankruptcy in 2021, and 46 more filed in 2022.
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In 2023, 79 companies filed for bankruptcy, marking the highest number of the decade. As 2024 progresses, the numbers are already starting to rival previous years, signaling the continuation of uncertainty in the U.S.
1. Acorda Therapeutics
On April 1, 2024, Acorda Therapeutics, a celebrated biotech firm known for pioneering treatments to combat Parkinson’s and Multiple Sclerosis, filed for Chapter 11 bankruptcy.
Source: AcordaNews/X
The move was part of an asset purchase agreement with Merz Therapeutics, a German-based group that manufactures medications for the treatment of movement disorders.
2. Cano Health
Cano Health, which reported over $1 billion in assets and liabilities, filed for Chapter 11 bankruptcy on February 4, 2024. This move comes three years after the healthcare company went public with its $4.4 billion SPAC merger.
Source: Cano Health/Instagram
However, experts were not surprised by the announcement, as the company has been the subject of mismanagement over the last few years.
3. Rite Aid
Rite Aid also filed for Chapter 11 bankruptcy on October 15, 2023. The company named Jeffrey Stein as its CEO and chief restructuring officer as it attempted to pull itself from its $3.45 billion debt.
Source: Wikimedia Commons
Rite Aid will also close “underperforming” stores across the U.S. Currently, the company has 2,100 stores in operation.
4. GenesisCare
GenesisCare, a cancer and cardiac care provider, filed for Chapter 11 bankruptcy in June 2023. The company, which has 5,500 employees and operates in several countries, will undergo an intense restructuring process.
Source: GenesisCare
The company will explore separating the U.S. business from its businesses in Australia, Spain, and the U.K., creating two platforms.
5. Envision Healthcare
The Nashville, Tennessee-based Envision Healthcare, a physician staffing firm, filed for Chapter 11 bankruptcy in May.
Source: Envision Healthcare
The company is restructuring its $7.7 billion debt with the support of more than 60 percent of its key stakeholders.
6. Pear Therapeutics
Pear Therapeutics, a digital health company, filed for Chapter 11 bankruptcy and laid off 170 employees, which was about 92 percent of the company’s workforce on April 5. Pear Therapeutics CEO Corey McCann was among the employees who were laid off.
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The company kept 15 employees as part of a “transition” team to look after the sale of the company’s assets.
7. Compass Medical Group
Compass Medical Group, which had offices and clinics in Boston, filed for Chapter 11 bankruptcy in May 2023. The sudden shutdown left thousands of patients confused and without a healthcare clinic.
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“It is with our deepest regret and great sadness to inform you of our imminent plan to close our practices,” the company said in a statement on its website.
8. Mercy Iowa City
Mercy Iowa City filed for Chapter 11 bankruptcy in April 2024, which will include a “liquidation analysis.” The filing included a reference to 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.
Source: Mercy Iowa City
However, major bondholders were unhappy about the $20 million valuation of the facility and were hoping for more money in the bidding process.
11. Trinity Regional Hospital Sachse
Trinity Regional Hospital Sachse in Texas filed for Chapter 11 bankruptcy after operating for two years. The hospital has defaulted on around $70 million of municipal bonds that were issued in 2020.
Source: Freepik
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 also attempted to find a buyer.
10. American Physician Partners
American Physician Partners, a medical staffing company based in Brentwood, Tennessee, filed for Chapter 11 bankruptcy protection in September 2023.
Source: Stephen Andrews/Unsplash
APP announced its closure in July and transitioned its 150 hospitals and health system clients to other emergency medicine staffing firms or insourced services within the organization.