CareMax, a Miami-based healthcare provider, files for Chapter 11 bankruptcy as it grapples with a staggering $693 million debt and substantial quarterly losses.
At a Glance
- CareMax, operating 56 medical centers across four states, files for Chapter 11 bankruptcy in Texas
- The company reports $693 million in debts, surpassing its $390 million in assets
- CareMax posted a significant second-quarter loss of $170.6 million
- Plans are underway to sell parts of the business, including its management services organization
- Secured lenders agree to provide $30.5 million in DIP financing to support operations during bankruptcy
Financial Distress Leads to Bankruptcy Filing
CareMax, a healthcare provider specializing in senior care, has filed for Chapter 11 bankruptcy protection in Texas. The company, which operates 56 medical centers across Florida, Texas, Tennessee, and New York, is facing severe financial challenges. With debts of $693 million significantly outweighing its assets of $390 million, CareMax finds itself in a precarious financial position.
The company’s financial woes were further highlighted by a staggering second-quarter loss of $170.6 million, which prompted CareMax to issue a going-concern warning in August. The situation deteriorated to the point where the company was unable to file its third-quarter report with the SEC due to insufficient funds, signaling the depth of its financial crisis.
Strategic Moves and Asset Sales
In an effort to navigate through this challenging period, CareMax is pursuing strategic options, including the sale of its management services organization and core centers assets. The company has enlisted the expertise of Alvarez & Marsal as financial advisers and Piper Sandler as investment bankers to guide them through the bankruptcy proceedings.
An affiliate of Revere Medical is set to purchase part of CareMax’s assets, including its management services organization. This sale is crucial as it supports the Medicare Shared Savings Program for approximately 80,000 beneficiaries. Additionally, a “stalking horse” agreement is in place for the clinical operating business, setting a baseline bid for potential buyers.
Medical services company CareMax has filed for Chapter 11 protection in Texas bankruptcy court, listing $422.6 million of funded debt and disclosing plans to sell its assets during the case. https://t.co/AwRIx0Im9v
— Law360 (@Law360) November 18, 2024
Maintaining Operations and Ensuring Patient Care
CareMax is seeking court protection to maintain its operations while restructuring and selling assets. The company has filed motions to continue business operations, pay employee wages, and settle critical vendor claims. To support these efforts, CareMax’s secured lenders have agreed to provide $30.5 million in debtor-in-possession (DIP) financing, which will help sustain operations during the bankruptcy process.
CEO Carlos de Solo emphasized the importance of these transactions, stating that they are crucial for protecting the company’s long-term value and ensuring continued care for patients. The successful sale of assets is expected to help repay CareMax’s debts and maintain service continuity for its patients.
