Healthcare providers have faced economic challenges over the last year, leading them to consider out-of-court restructurings, bankruptcy filings, selling off facilities, and sometimes closing locations.
Financial issues have included a decline in reimbursement rates, increased insurance liability premiums, and rising labor, product, and operating costs.
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Senior care Chapter 11 filings reached a two-year high in the first quarter of 2025, while hospital bankruptcy filings doubled compared to recent trends, healthcare restructuring advisory firm Gibbins Advisors reported in May.
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The healthcare industry faced a higher rate of 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.
Healthcare provider 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.
Healthcare providers file for bankruptcy
Prospect employed about 12,600 workers and owned and operated 16 acute care and behavioral hospitals in California, Connecticut, Pennsylvania, and Rhode Island, providing a wide range of inpatient and outpatient services.
Also, Landmark Holdings of Florida LLC, the parent company of six Landmark Hospital specialty hospital 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.
And now, huge healthcare facilities operator Genesis Healthcare Inc. has filed for Chapter 11 bankruptcy, seeking a sale of its assets to a stalking-horse bidder.
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Genesis Healthcare files for Chapter 11 bankruptcy
The Kennett Square, Pa.-based healthcare provider and 297 affiliates filed their petition in the U.S. Bankruptcy Court for the Northern District of Texas on July 9, listing $1 billion to $10 billion in assets and liabilities, including over $708 million in secured debt and over $1.5 billion in unsecured debt.
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The debtor’s largest creditors include a real estate loan to MAO 22322 LLC, owed over $324 million; the Internal Revenue Service, owed over $103 million; and Healthcare Services Group Inc., owed over $68 million in trade debt.
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Genesis Healthcare is seeking $30 million in debtor-in-possession financing from its prepetition lenders and approval of a stalking-horse bid to purchase the company out of bankruptcy from affiliates of prepetition lender ReGen Healthcare Inc.
The debtor’s founders, Michael Walker and Richard Howard, launched the company in 1985 with the acquisition of nine skilled nursing facilities. The company expanded over the years to over 500 facilities with 60,000 licensed beds in 30 states by 2016, according to a declaration by Co-Chief Restructuring Officer Louis E. Robichaux IV.
As the company expanded, profits did not grow, and its facilities became difficult to manage. The company began divesting unprofitable facilities in 2017, dropping to fewer than 400 facilities by the beginning of 2020 when Covid-19 struck.
The company faced a liquidity shortfall, but avoided bankruptcy when ReGen Healthcare provided a $100 million capital infusion, and it renegotiated certain leases.
Genesis Healthcare’s financial distress continued as it could not handle $8 million per month in settlement and defense costs on personal injury and wrongful death cases. It hired restructuring advisers in the first half of 2025 and decided to file for bankruptcy protection.
The healthcare provider currently operates 175 facilities in 40 states, consisting of about 20,000 beds with 15,000 residents and an estimated 27,000 employees. The company’s facilities consist of 165 skilled nursing facilities and 10 assisted-living/independent-living facilities.
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