CareMax Inc., a healthcare provider specializing in clinical care centers offering a wide range of medical services, has filed for Chapter 11 bankruptcy protection on November 17, 2024, the Street reports.
The Miami-based company seeks to reorganize and sell substantially all of its assets. According to the bankruptcy petition filed in the US Bankruptcy Court for the Northern District of Texas, CareMax listed $390 million in assets and $639 million in debts.
The company has faced significant financial challenges in recent years, reporting a net loss of $37.8 million in 2022 and a deeper loss of $683.3 million in 2023. In its filing, CareMax cited several factors contributing to its financial distress, including industry-wide headwinds, inflationary pressures driving up labor and operational costs, and economic factors limiting the company’s ability to raise new capital. Additionally, the lingering impact of the Covid-19 pandemic and insufficient industry reimbursement rates have further strained its financial position, resulting in lower net patient revenue.
CareMax’s growth strategy, which relied heavily on large capital investments and substantial operating expenses, has also added to its financial burden. Rising interest rates led to higher debt service costs, which made it difficult for the company to meet its obligations and comply with its credit agreement covenants. By February 2024, CareMax began defaulting on approximately $35 million in prepetition debt.
The company sought alternatives to an in-court restructuring, including a prepetition sale of its assets, but ultimately decided to file for Chapter 11. CareMax has secured a restructuring support agreement, which includes a planned sale of the company’s Medical Shared Savings Program to Revere Medical. The company is also preparing to sell its operating clinic business through a Section 363 auction, with a stalking-horse bidder to be named in a bidding procedures motion expected on or around November 24.
CareMax operates 46 clinical centers across Florida, New York, Tennessee, and Texas, employing about 1,100 staff members and serving approximately 260,000 patients. The company’s bankruptcy filing follows a series of similar filings within the healthcare sector this year, despite predictions of fewer healthcare provider bankruptcies in 2024 compared to 2023. Notably, healthcare providers such as CarePoint Health Systems and Wellpath Holdings have also sought Chapter 11 protection in recent months.
