Steward Health Care System, the largest tenant of hospital landlord Medical Properties Trust, has engaged restructuring advisers as the healthcare provider contends with deepening financial problems, WSJ Pro Bankruptcy reported. Dallas-based Steward is working with law firm Weil Gotshal & Manges and turnaround consulting firm AlixPartners to evaluate options for its troubled business.
Medical scrubs designer and distributor Careismatic Brands filed for bankruptcy to eliminate $833 million in debt, a restructuring prompted by falling demand and higher interest rates, WSJ Pro Bankruptcy reported. Two years after logging record revenue, the Santa Monica, Calif.-based company owned by private-equity firm Partners Group filed for chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court in Newark, N.J., listing both assets and liabilities exceeding $1 billion. Careismatic becomes one of the latest companies to fall into bankruptcy as COVID-19 worries lessen, causing plummeting demand for some products or blindsiding some companies that ramped up production for demand that never materialized. Kent Percy, Careismatic chief restructuring officer, said the pandemic led to sharp increases in medical apparel demand, leading to a record $687 million in revenue in 2021. That was up from $635 million in 2020 and $498 million in 2019. “While Careismatic expanded capacity to meet market demand, demand has normalized in 2022 and 2023,” he said in a sworn declaration filed with the court. Revenue last year dropped to $559 million. “Macroeconomic issues, including a rapid and dramatic rise in interest rates, persistent supply-chain disruptions, rising material costs and a challenging labor market” also weakened demand and hurt profit margins, he said. Founded in 1995, Careismatic has grown to 17 brands from basically one brand, Cherokee Medical Uniforms, which itself was bought out of bankruptcy. It also sells school uniforms and other medical apparel and devices. Partners Group bought the business in 2021. In September, it hired professionals to begin working on a restructuring.
Even for one of the wealthiest municipalities in the U.S., operating a nursing home is a strain, Bloomberg News reported. Greenwich, Conn., owns a 121-year-old nursing home. That makes it unusual, since only 5% of nursing homes are government-owned. The town is atypical in other ways. With one of the highest per-capita incomes in the country, it has long been a locus of wealth and celebrity, evident in services such as three marinas and a public golf course designed by architect Robert Trent Jones Sr. Its Nathaniel Witherell nursing home, however, like many such facilities across the country, is losing money. Founded as a contagious-disease hospital in 1903, the 202-bed nonprofit facility offers short-term rehabilitation as well as long-term and memory care. Situated on what the town describes as 24 rolling acres — two miles from downtown — it touts staff turnover that’s a fraction of the national rate. Its kitchen gets its produce from the facility’s culinary wellness garden that was built in 2017 with donor and volunteer contributions. But Greenwich had to write off $4.1 million in bad debt from the nursing home last year, according to documents for an upcoming $115 million bond and note offering. It still expects to continue funding the nursing home’s operating losses in subsequent general fund operating budgets. The town reported a general-fund balance of $71.8 million in the current fiscal year.
New York City intends to wipe out more than $2 billion in medical debt for up to 500,000 residents, tackling a top cause of personal bankruptcy, Mayor Eric Adams announced yesterday, the Associated Press reported. The city is working with RIP Medical Debt, a nonprofit that buys medical debt in bulk from hospitals and debt collectors for pennies on the dollar. The group targets the debt of people with low incomes or financial hardships and then forgives the amounts. Under the program, the city will spend $18 million over three years. “For middle- and working-class New Yorkers, medical bills can be financially devastating,” Adams said as he announced the plan. “Working-class families often have to choose between paying their medical bills or some of the basic essentials that they need to go through life.” The mayor said medical debt is the No. 1 cause of bankruptcy in the United States, disproportionately burdening low-income households and people with inadequate insurance. He called the debt relief program the largest municipal initiative of its kind in the country, though RIP Medical Debt has worked with other municipalities.
Drug manufacturer Endo International Plc won bankruptcy court permission to poll its creditors on a plan that would hand control of the business to lenders and settle opioid liabilities in deals valued at more than $600 million, Bloomberg News reported. Judge James L. Garrity Jr. said during a court hearing yesterday in New York that he’ll allow Endo creditors to vote on its restructuring plan weeks after the company announced opioid-related settlements. The judge’s approval keeps Endo on pace to emerge from chapter 11 protection in the second quarter of 2024. Endo filed for bankruptcy in August 2022 to deal with more than $8 billion in long-term debt and lawsuits alleging the company helped fuel the nation’s addiction crisis. Opioid lawsuits also drove fellow drugmakers Mallinckrodt Plc and OxyContin maker Purdue Pharma LP into chapter 11. Endo’s restructuring plan includes settlements with state and federal authorities, and is expected to pay individual opioid victims between $89.7 million and $119.7 million, according to court documents. The company has also agreed to pay $273 million to more than 40 states and as much as $365 million to the U.S. Justice Department. The exact amount of the payments depends on whether Endo opts to pay some settlements in full when the company leaves bankruptcy or over time, the documents show.
Pharmaceutical developer Humanigen has filed for bankruptcy, attributing its financial problems largely to the U.S. Food and Drug Administration’s rejection of its COVID-19 drug in 2021, WSJ Pro Bankruptcy reported. The Burlingame, Calif.-based company, once controlled by convicted pharma fraudster Martin Shkreli, sought protection from creditors Wednesday with unsecured debts of $44.1 million, while listing assets of $521,000. Humanigen is fending off lawsuits by manufacturers and marketers over its inability to pay for services it procured in anticipation of selling the drug. The company said that its antibody medicine lenzilumab showed promise in treating COVID-19 patients with pneumonia early in the pandemic. Humanigen raised more than $140 million through two stock sales in 2020 even though it had generated little revenue and the drug candidate hadn’t been approved. Humanigen signed agreements with companies that year that would manufacture, package and market lenzilumab. But in September 2021, the FDA declined to give emergency-use authorization to lenzilumab to treat COVID patients because it said it failed to establish the potential benefits outweighed the potential risks, according to a regulatory filing.
The Hospital at Westlake Medical Center announced Friday it would be closing its emergency department that evening, KXAN.com reported. Local emergency leaders said that they were given little notice about the closure which could impact paramedics and nearby medical facilities. The hospital’s website confirmed its emergency department would be closed by 8 p.m. Friday, Dec. 29. Douglas Havron with the Capital Area of Texas Regional Advisory Council (CATRAC) said he became aware of the ER’s closing through local EMS. The CATRAC oversees trauma and emergency response across 11 counties, including Travis County. The Hospital at Westlake Medical Center issued a statement about the closure. It said “As part of our ongoing restructuring efforts, we have made the difficult decision to close the emergency room for now. We promptly informed all necessary agencies about this change and will maintain open communication on any further developments.” The “restructuring” mentioned in the statement refers to the hospital’s filing for chapter 11 bankruptcy in September 2023.
Consulting giant McKinsey & Company agreed to a $78 million settlement in a case over its role in advising opioid manufacturers to design misleading marketing campaigns, The Hill reported. A group of U.S. health insurers and company benefit plans, referred to in court documents as third-party payors, alleged in the suit that the firm helped add fuel to the fire in the opioid abuse epidemic by advising drug manufacturers such as Purdue Pharma in crafting deceptive marketing campaigns for opioids. The potential settlement, the agreement to which was filed Friday, still requires a judge’s approval. If presiding judge Charles R. Breyer, district judge for the Northern District of California, signs off on the settlement, McKinsey has two weeks from the approval date to pay $78 million to the plaintiffs by wire. The payment would establish a fund to reimburse third party payors for some or all of their prescription opioid costs. The settlement comes two years after McKinsey paid $573 million to 49 state attorneys general, Washington, D.C. and five territories in a similar case.
