- Chapter 11 bankruptcy filings for healthcare companies were 84% higher in 2022 compared to 2021, according to a recent report from advisory firm Gibbins Advisors.
- The combined number of senior care and pharmaceutical companies made up about half of the filings, with bankruptcy activity now returning to 2019 and 2020 levels, according to the report.
- Just two hospital cases were filed in 2022, compared to 10 filed in 2019, the report found.
Healthcare companies are currently working through a “COVID hangover” as they deal with factors like continually high labor costs and staffing and supply shortages, according to the report.
Companies are also facing cost increases amid inflation, low returns on invested assets and interest rate hikes — all of which can strain a company’s cash flow and access to capital.
From 2019 to 2022, senior care companies accounted for about 26% of healthcare company bankruptcy filings, while pharmaceutical companies accounted for about 23%.
Hospitals made up about 13%, followed closely by medical supply companies and clinics and physician practices.
Filings rose significantly throughout the year, with about three times more fillings in the fourth quarter of 2022 than in the first quarter.
There was also an uptick in large bankruptcy filings, defined as companies with liabilities greater than $100 million. Only one large bankruptcy was filed in the first half of 2022, compared to six in the second half of the year.
Filings among lower middle-market companies, defined as those with liabilities in the $10 million to $50 million range, also rebounded to levels higher than those seen when the pandemic began.
This year, Gibbins expects the senior care and pharmaceutical industries to continue dealing with market consolidation and other financial distresses, with rural and standalone hospitals in particular likely to experience the same.
Hospital bankruptcy filings, however, were down in 2022 compared to 2019, with just two cases filed — at San Jorge Children’s Hospital in Puerto Rico, and Pipeline Health System, a California-based system with seven safety net hospitals in California, Texas and Illinois.
For the report, Gibbins analyzed data from BankruptcyData.com covering filings among healthcare companies with liabilities of $10 million or more from 2019 to 2022 broken out by sector.