Severe industry headwinds have led several healthcare providers into financial distress over the last two years, resulting in bankruptcy filings.
The health care sector faced more bankruptcy filings in the last two years, with 79 cases in 2023 and 57 in 2024, after averaging 42 bankruptcy filings each year from 2019 through 2022, according to Gibbins Advisors.
Senior care Chapter 11 filings reached a two-year high in the first quarter of 2025, but filings improved in the second quarter with a 50% decline to seven filings compared to 14 in the same period of 2024, Gibbins reported.
Major healthcare providers file for bankruptcy
- Prospect Medical Holdings, January 2025.
- Landmark Holdings of Florida, March 2025.
- Genesis Healthcare, July 2025.
- ModivCare, August 2025.
Several major healthcare providers have filed for Chapter 11 protection this year, led by huge health care facilities operator Genesis Healthcare Inc., which filed bankruptcy on July 9, 2025, seeking a sale of its assets to a stalking-horse bidder.
Related: 43-year-old auto parts retail chain files Chapter 11 bankruptcy
The Kennett Square, Pa.-based health care provider and 297 affiliates filed their petition with a plan to sell the company out of bankruptcy to affiliates of prepetition lender ReGen Healthcare Inc.
Hospital operator Landmark Holdings of Florida LLC, the parent company of six Landmark Hospital specialty facilities, filed for Chapter 11 bankruptcy on March 9, 2025, to reorganize its businesses that are located in three states in the Midwest and South.
Also, medical facility operator Prospect Medical Holdings on Jan. 11, 2025, filed for Chapter 11 bankruptcy protection with plans to reorganize certain medical assets, sell two medical centers in Rhode Island, and divest Pennsylvania assets through its case.
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ModivCare declares prearranged Chapter 11 bankruptcy Â
Finally, giant healthcare services provider ModivCare Inc. and 70 affiliates filed for a prearranged Chapter 11 bankruptcy, seeking to reduce its $1.4 billion in debt and hand its assets to its lenders, facing an unsustainable capital structure, deteriorating liquidity, and industry headwinds.
ModivCare filed its petition in the U.S. Bankruptcy Court for the Southern District of Texas on Aug. 20, with a restructuring support agreement with its first-lien and second-lien lenders that will exchange $871.7 million in first-lien debt for a $200 million exit term loan and 98% equity in the company.
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The agreement also exchanges $316.2 million in second-lien claims for 2% equity in the company.
Certain other claims holders may participate in an equity rights offering up to $200 million. The agreement includes a $250 million exit revolver.
“With the support of their key stakeholders, the debtors expect to emerge from chapter 11 on an expeditious timeframe, with a healthier balance sheet and the ability to continue serving their customers,” according to a declaration from Chad J. Shandler, chief transformation officer of ModivCare.Â
Debtor seeks $100 million DIP loan
The debtor will seek $100 million in debtor-in-possession financing, with $62.5 million available on an interim basis.
The Denver-based debtor listed $1 billion to $10 billion in assets and liabilities in its petition.
Related: Popular Italian restaurant chain files Chapter 11 bankruptcy
Its largest unsecured creditors include WSFS Bank, owed $228 million; Lyft Healthcare Inc., owed over $21.6 million; Uber Healthcare Inc., owed $8.5 million; and Humana, owed $5.3 million.
ModivCare, established in 1996, provides non-emergency medical transportation, personal care services, and remote patient monitoring to millions of clients in 48 states and the District of Columbia.
The company employs about 23,675 workers and 1,000s of third-party transportation providers and their drivers.
Industry headwinds that caused financial distress
- Reimbursement pressure from state Medicaid programs.
- Labor cost inflation.
- Mounting competition from regional and tech-driven companie
- State Medicaid funding and eligibility cuts.Â
The debtor blamed industry headwinds for its distress, which included reimbursement pressure from state Medicaid programs, labor cost inflation, and mounting competition from regional and tech-driven companies, according to Shandler.
Among the problems were regulatory changes that cut state Medicaid funding and eligibility, as well as Medicare Advantage plan design changes reducing supplemental and further pressuring revenues.
ModivCare generated $2.79 billion in revenue in the fiscal year ending Dec. 31, 2024, with a net loss of $201.3 million.
The debtor’s revenue in the first quarter of 2025 declined by almost 5% year-over-year.
