Brentwood, Tenn.-based Quorum Health, which operates 23 hospitals in 13 states, announced April 7 that it has filed for Chapter 11 bankruptcy.
The company, a spinoff of Franklin, Tenn.-based Community Health Systems, said the bankruptcy filing is part of a plan to recapitalize the business and reduce its debt by about $500 million. Quorum said it reached an agreement on the plan with a majority of its noteholders and term loan lenders.
"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," Quorum Health President and CEO Bob Fish said in a news release.
Debtor-in-possession financing of $100 million will help support Quorum's operations during the bankruptcy process. A $200 million equity commitment from noteholders will also be funded upon completion of the bankruptcy case.
"Our company has been transparent about the need to reduce the large amount of debt and the associated high interest rate inherited when Quorum Health was formed in 2016," reads a statement from Mr. Fish on the company's website. "By working with key investors in advance, we have been able to utilize the rules under Chapter 11 and the U.S. Bankruptcy Code to recapitalize the company."
Quorum said its hospitals will operate as normal throughout the bankruptcy process, which Mr. Fish said is expected to last roughly two months.
The company announced March 31 that it is delaying its annual report for 2019. Quorum ended the third quarter of last year with a net loss of $76 million on revenues of $420 million. In the third quarter of 2018, the company recorded a net loss of $54 million on revenues of nearly $461 million.