In the healthcare sector, Chapter 11 bankruptcy filings have seen a decrease in the past three quarters, with pharmaceutical and senior housing companies contributing to nearly half of all filings in 2024, as reported by Gibbins Advisors.
Senior housing accounted for 12 of the 58 filings this year, while pharmaceutical companies made up 14 filings. Over the past five years, senior care has comprised 65 of the 275 bankruptcy cases analyzed in the report.
Although healthcare bankruptcies are on the decline, financial challenges persist due to factors like high interest rates and labor cost increases, leading to margin squeezes and pressure from payors.
While mid-market bankruptcy filings have decreased, large healthcare companies with over $500 million in liabilities remain elevated. Clare Moylan, Principal at Gibbins Advisors, noted that out-of-court financial restructuring could be contributing to the lower bankruptcy volumes.
The Polsinelli-TrBK Distress Indices Report indicates record high distress in the healthcare sector, with the southeast region experiencing the majority of distress. The total percentage of healthcare filings has increased from 12.2% to 15.3% over the past year.
