Quorum Health announced Tuesday it has emerged from its Chapter 11 bankruptcy with a new CEO, new board and stronger financial footing.
Former Acadia Healthcare CEO Joey Jacobs is the new head of the embattled hospital chain, based in Brentwood, Tenn. For-profit Quorum said it achieved the plan outlined in its April restructuring agreement with lenders of reducing debt by about $500 million. The agreement included a $100 million commitment from bondholders and a $200 million equity commitment in exchange for shares in the reorganized company. Quorum said it also restructured its balance sheet.
Completing the process allows Quorums' 22 affiliated hospitals in rural and mid-sized markets to continue to deliver care, Jacobs said in a statement.
"We appreciate the court's diligence and are grateful for the wisdom of our bondholders in recognizing the strength of our operations and taking the difficult but necessary steps to provide a platform for success," he said.
Franklin, Tenn.-based Acadia ousted Jacobs as CEO in 2018, a position he'd held since early 2011. At the time, the board's chairman said the behavioral health services provider needed a new leader to accelerate Acadia's momentum and drive value creation. Under his leadership, the company grew from having six locations to 586 facilities in 40 states, the United Kingdom and Puerto Rico.
Prior to Acadia, Jacobs co-founded Psychiatric Solutions, Inc. and served as its chairman, president and CEO. Before that, he spent more than two decades at HCA Healthcare. He will also serve on Quorum's revamped Board of Managers.
In addition to Jacobs' appointment, Martin Smith is now Quorum's president and chief operating officer. Smith joined the company when it was formed in 2016 and previously served as executive vice president and chief operations officer. Alfred Lumsdaine will continue to serve as Quorum's chief financial officer.
Catherine Klema, president of the financial advisory and consulting firm Nettleton Advisors, will lead Quorum's reconstituted board. She has previously worked for investment banks and also serves on the board of Montefiore Medicine.
In a statement, Klema said Jacobs brings a strong track record of creating value for stakeholders.
"When paired with Mr. Smith's unique insights and success driving incremental improvement in the Company's operations in recent years, we have great confidence in the strength of this management team," she said.
Other board members include Murtaza Ali, operating partner at Davidson Kempner Hawthorne Partners, Michael Rothbart, senior research analyst with GoldenTree Asset Management, Alice Schroeder, former analyst, author and Quorum board member since 2018, Andrew Schultz, managing member of Woodbine Consulting, and Dan Slipkovich, an experienced health system administrator.
In its statement Tuesday, Quorum said noteholders agreed to equitize their note claims into new equity of the company and will hold substantially all of the reorganized company's equity. Quorum had been losing money since its 2016 spinoff from Franklin, Tenn.-based Community Health Systems.