Dive Brief:
- Healthcare bankruptcies rose in the first quarter after declining last year, according to a report released last week by restructuring advisory firm Gibbins Advisors.
- Twelve healthcare companies with liabilities of at least $10 million filed for Chapter 11 bankruptcy protection in the first quarter, up 33% from the fourth quarter of 2025.
- Senior care firms and physician practices drove bankruptcies in the first quarter, with four filings each.
Dive Insight:
Healthcare bankruptcies declined in 2025, after reaching a multi-year high in 2023. The healthcare industry recorded 45 bankruptcy filings, down significantly from the 79 reported just a few years earlier as high interest rates, increased labor and supply costs, and heightened pressure from payers squeezed margins.
Now, bankruptcy filings are on track to rise slightly this year, according to the latest report by Gibbins. If future filings keep pace with the first quarter, the sector will record 48 bankruptcies in 2026, about 7% above the previous year.
Mid-market companies, or those with liabilities from $10 million to $50 million, drove bankruptcies in the first quarter, making up around two-thirds of all filings, according to Gibbins. Large cases with liabilities over $100 million were flat, with just three bankruptcies in the first quarter and fourth quarter.
First quarter bankruptcy filings in line with 7-year average
Meanwhile, the sector is bracing for financial headwinds ahead, including significant cuts to safety-net insurance program Medicaid. Last week, Nebraska became the first state to roll out Medicaid work requirements mandated under the GOP’s “Big Beautiful Bill,” which could kick tens of thousands of people in the state off the insurance program for low-income people.
Additionally, more generous financial assistance for health plans on the Affordable Care Act exchanges expired last year, pushing some enrollees to drop their coverage or shift to high-deductible plans.
For-profit providers have already flagged financial hits this year due to the lapse of the enhanced subsidies. Universal Health Services lost about $15 million in the first quarter due the expiry, while HCA Healthcare took a $150 million hit during the period.
