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CareMax files for Chapter 11 bankruptcy due to financial struggles

Healthcare

Business Honor
21 November, 2024

CareMax files for Chapter 11 bankruptcy, citing $693 million in debts and exploring asset sales

CareMax, a healthcare company running 56 medical centers in Florida, Texas, Tennessee, and New York, filed for Chapter 11 bankruptcy in Texas on Sunday. The Miami-based firm caters mainly to older patients and provides a host of medical services. According to the bankruptcy filing with the U.S. Bankruptcy Court for the Northern District of Texas, CareMax listed debts of $693 million and assets totaling $390 million.

The company has faced severe financial distress over the past few months. In August, CareMax reported a loss of $170.6 million in the second quarter and issued a going-concern warning. Earlier this month, it disclosed that it won't be in a position to file its third-quarter financial report with the U.S. Securities and Exchange Commission as it will not have adequate funds.

CareMax disclosed it will explore selling its management services company and core central assets, or engage in other types of transactions. The company has hired Alvarez & Marsal as financial advisers and Piper Sandler as investment banker to advise the debt restructuring efforts.

This is the second bankruptcy filing of this healthcare sector, which witnessed a spate of several other healthcare providers file for bankruptcy protection this year. In one recent instance, Steward Health Care, a Massachusetts-based provider, filed for bankruptcy in May. The bankrupt entity had sought to sell off its entire 31 hospitals in an effort to restructure an imposing $9 billion in debt.

In late 2022, CareMax purchased the Medicare value-based business of Steward for $25 million in cash and 23.5 million shares of its stock. Unfortunately for investors, CareMax's stock has plummeted lately, closing at $1.68 on Friday for an 89% decline year-to-date. The bankruptcy filing is a difficult chapter for CareMax to get through as it tries to sail itself back to solid financial grounds.