UPDATE: April 7, 2020: Quorum filed for Chapter 11 protection Tuesday and said it has entered into a restructuring agreement with a majority of its lenders and noteholders with terms to reduce its debt by about $500 million.
The health system said operations at its hospitals will continue. "We believe the financial restructuring plan announced today will strengthen our business and enable our community hospitals to continue the important work they are doing in addressing the COVID-19 crisis, as well as serve their patients and communities," CEO Bob Fish said in a statement.
Quorum secured debtor-in-possession financing of $100 million and a $200 million equity commitment when the bankruptcy case is completed.
- For-profit hospital operator Quorum Health said in a recent filing with the Securities and Exchange Commission that it may have to file for Chapter 11 protection to address current liquidity needs while continuing to care for patients and keep its hospitals operating.
- The company said it's in ongoing discussions with certain debt holders concerning a recapitalization or financial reorganization transaction.
- Quorum also announced in the SEC filing that it will be late to file its annual 10-K report, covering financials for its fiscal year ending December 31, 2019.
COVID-19 has upended hospitals' typical operations, prompting many to halt lucrative elective surgeries and cancel doctors visits to preserve staff and resources. Some worry those patients and revenue may never come back as unemployment claims go up and people lose their employer-sponsored health coverage.
Tennessee-based Quorum Health, which operates 24 hospitals in 14 states, may have already been more ill-positioned financially than other systems for such a pandemic.
Quorum missed Wall Street earnings expectations in its most recent financials for the third quarter of 2019, posting a net loss of almost $76 million and a revenue decline almost 9% year over year. The company now said it's delaying its 10K report with its most recent financials due to restructuring talks, but has 15 days to do so.
The for-profit chain went public in May 2016 with 38 hospitals — 14 of which have since shuttered. In 2017 private equity firm KKR took a 5.6% stake in the system for $11.3 million.
Beyond being Quorum's largest debt-holder today, KKR also owns about 9% of its public shares. In December, the firm offered to buy Quorum out and take the hospital chain private at $1 a share.
While negotiating with debt holders and weighing its options, Quorum intends to maintain all operations at its hospitals without any interruption in service, CEO Robert Fish said in a statement.
"Our facilities play a critically important role in their communities and the fight against COVID-19," Fish said. "We are intensely focused on ensuring our employees have the resources they need to provide quality care to the patients and communities they serve, now and well into the future."