The company said its financial turmoil partly stems from Steward Health Care's own troubles.
The list of healthcare provider bankruptcies this year has now grown to include Miami-based CareMax.
A combination of factors, including increasing expenses and its relationship with Steward Health Care, led the organization to file for Chapter 11 bankruptcy, according to a filing with the U.S. Bankruptcy Court for the Northern District of Texas.
CareMax, which serves approximately 260,000 patients annually and employs around 1,100 employees across 46 clinical centers, listed debts of $693 million and assets of $390 million in the filing.
In the lead-up to bankruptcy, the company suffered a net loss of $683.3 million for 2023 before experiencing a loss of $170.6 million in its most recent earnings report for the second quarter.
As part of its restructuring process, CareMax will sell the Medicare Shared Savings Program portion of its management services organization to Revere Medical, formerly known as Rural Health Group and backed by private equity firm Kinderhook Industries.
Revere Medical also finalized the acquisition of Steward’s physician group, Stewardship Health, last month, signaling its interest in distressed assets.
Steward’s own bankruptcy influenced CareMax’s financial downturn, the company’s chief restructuring officer, Paul Rundell, outlined in the filing.
After acquiring Steward’s Medicare value-based care business in 2022, CareMax served as the exclusive value-based management services organization across Steward’s Medicare network. However, Steward filed a motion to reject its business relationship with CareMax this summer when it filed for chapter 11 bankruptcy.
Beyond Steward, CareMax struggled with swelling costs from leases, rising interest rates, changes in regulatory reimbursement, inflation, rising labor and operational costs, and high levels of medical utilization following the pandemic.
“This confluence of economic factors constrained CareMax’s ability to raise new capital as a crucial moment for the newly expanded enterprise, which left the Company with limited options to address its funded debt obligations,” Rundell said in the filing.
Several providers have felt the weight of the current financial climate and entered bankruptcy recently. CareMax competitor Cano Health filed in February after the Miami-based provider had difficulty generating profit from its Medicare Advantage business.
A recent report by Gibbins Advisors, however, showed that healthcare bankruptcies are in decline overall. Through the first six months of this year, the report tracked 29 filed bankruptcies, which followed 79 cases in total for 2023.
The drop in volume is driven by fewer cases involving middle-market companies with liabilities ranging from $10 million to $100 million, Gibbins stated.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
CareMax, a Miami-based provider, filed for chapter 11 bankruptcy, declaring $390 million in assets and $693 million in liabilities.
In its filing, the organization pointed to the macroeconomic environment and industry headwinds, along with Steward Health Care’s rejection of its contract, as catalysts for its decision.
CareMax will offload the Medicare Shared Savings Program part of its management services organization to Revere Medical, which recently acquired Stewardship Health.