Healthcare bankruptcies slow after peaking in 2023: report

seekingalpha08-24

Despite a high level of financial distress in healthcare, bankruptcy filings in the sector have slowed over the past nine months after reaching a record high in Q3 2023, Gibbins Advisors, a healthcare...

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In its Interim 2024 Report, Gibbins noted that based on six months of case filings through June 30, the healthcare sector is expected to see 58 bankruptcy filings this year, which implies a 27% drop from 2023, when there were 79 filings.  Source: Gibbins Advisors Despite the slowdown, bankruptcy filings of very large healthcare companies (with liabilities exceeding $500M) remain at the elevated levels seen last year, the Nashville, Tennessee-based firm noted. After struggling with billions of dollars in debt, including opioid-related liabilities, drugstore chain Rite Aid (OTC:RADCQ) filed for Chapter 11 bankruptcy protection in October. Steward Health Care, the largest physician-led hospital operator in the U.S. and Medical Properties Trust's (MPW) biggest tenant, filed for Chapter 11 bankruptcy in May. According to Gibbins, specific subsectors, such as clinics and physician practices, as well as hospitals, have witnessed higher rates of bankruptcy filings this year, with the former group indicating a 60% rise. Over the past five years, publicly traded healthcare firms have represented 24% of bankruptcy filings, with the pharmaceuticals space leading the charge. As the healthcare sector continues to face headwinds such as labor constraints and macro challenges, including capital market pressures, Gibbins cites a potential increase in bankruptcy filings as the year progresses. Major healthcare benchmarks such as the iShares U.S. Healthcare Providers ETF (IHF), the SPDR S&P Health Care Services ETF (XHS), the SPDR Biotech ETF (XBI), and the SPDR S&P Pharmaceuticals ETF (XPH) have all lagged the S&P 500 (SP500) this year.  \"The trend of lower bankruptcy volumes is not resonating with the amount of financial distress we are seeing in our practice,\" said Clare Moylan, Gibbins' co-founder and principal partner. \"A possible reason could be financial restructuring taking place out of court rather than in bankruptcy. We wouldn't be surprised if the case volumes increased from current levels as the year progresses,\" she added. In recent months, publicly traded physician practices such as Akumin (OTCPK:AKUMQ) and Cano Health (CANOQ) filed for bankruptcy protection, while Invitae (OTC:NVTAQ) and DermTech (OTCPK:DMTKQ) were among some of the notable bankruptcies in the diagnostic space. Invacare (IVCRQ), Allied Healthcare Products (OTC:AHPIQ), Surgalign Holdings (SRGAQ), ViewRay (OTC:VRAYQ), and SmileDirectClub (OTC:SDCCQ) were among the publicly traded medical equipment makers/ suppliers to seek bankruptcy protection. Sorrento Therapeutics (OTC:SRNE), Lucira Health (LHDXQ), Codiak BioSciences (CDAKQ), Humanigen (OTC:HGENQ), Clovis Oncology (CLVSQ), Athersys (OTC:ATHXQ), and Gamida Cell (OTC:GMDAQ) were among the recent biopharma bankruptcies.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2462465790"}