UPDATE: July 8, 2020: Quorum has successfully completed its financial restructuring and emerged from Chapter 11 bankruptcy, according to the system.
It also announced a new board of managers, including Joey Jacobs, former CEO of Acadia Healthcare, as Quorum's new CEO. He will succeed Bob Fish.
- For-profit hospital operator Quorum Health received approval of its plan to recapitalize the business Monday in U.S. Bankruptcy Court for the District of Delaware. Quorum expects to emerge from bankruptcy in early July, according to regulatory filings.
- The system filed for Chapter 11 bankruptcy April 7 to address current liquidity needs while continuing to care for patients and keep its hospitals operating amid a pandemic, according to a statement. It entered into a restructuring agreement with a majority of its lenders and noteholders.
- Quorum still needs the court to issue a final order, but said the reorganization will reduce its debt by about $500 million, as originally expected.
Tennessee-based Quorum Health, which operates 22 rural and mid-sized hospitals in 13 states, may have been more ill-positioned financially than other systems going into the pandemic.
The company went public in May 2016 with 38 hospitals. Three of those hospitals have since shuttered and 11 have been sold. 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.
But that didn't pan out, and Quorum instead ended up filing for bankruptcy in April, soon after the COVID-19 pandemic hit. The restructuring agreement now "allows our company to begin a new chapter with the flexibility and resources to continue supporting our community hospitals as they serve on the frontlines of this pandemic and beyond," Marty Smith, Quorum's executive vice president and chief operating officer, said in a statement Monday.
"We are grateful for the confidence of our financial stakeholders and partners, as well as our dedicated employees and physicians, and look forward to building on the significant progress we have made in strengthening our operations in recent years," he said.
Correction: A previous version of this article misidentified the status of 14 hospitals formerly owned by Quorum. Three hospitals were closed while 11 were sold.