Healthcare company bankruptcy filings are on track to slow in 2024.
Twenty-nine healthcare companies, each with liabilities of more than $10 million, filed for Chapter 11 bankruptcy protection in the first half of the year. At that rate, 58 healthcare companies are projected to seek bankruptcy protection this year, which would be a 27% decrease from 2023's 79 cases filed, according to a report published Wednesday by advisory firm Gibbins Advisors.
Related: Healthcare bankruptcies in 2023 hit highest level in 5 years
Fewer middle-market companies with liabilities between $10 million and $100 million are filing for Chapter 11, according to the report, which analyzed data from January 2019 through June 2024.
However, case volume among large healthcare companies with liabilities of more than $500 million is still elevated. The report projects 12 large healthcare companies will file for bankruptcy protection in 2024 — the same as 2023 — and six already have filed. That would compare with five filings for all of 2022.
Pharmaceutical and senior care companies make up almost half of the healthcare bankruptcy filings since 2019.
In the past five years, Gibbins found 45% of healthcare bankruptcy filings involved privately held organizations not backed by private equity; 14% were by private equity-backed companies; 24% were by publicly traded companies, and 17% involved nonprofits.
The lower bankruptcy volume in 2024 does not necessarily equate to less financial stress in the healthcare industry, Clare Moylan, principal at Gibbins Advisors, said in a statement.
Hospitals and health systems, for example, are still struggling under the weight of high labor costs, inflated supply costs and low reimbursement rates. Recovering patient volumes are boosting operating revenue for providers, but they are also leading to increased expenses and added pressure on facilities.
One hospital company has filed for bankruptcy protection in 2024: Steward Health Care. The Dallas-based company filed for Chapter 11 bankruptcy in May and has sought to sell its 31 hospitals and other facilities. Steward signed a definitive agreement with Rural Healthcare Group this week to sell its physician group for $245 million.
