Under a restructuring plan approved by a bankruptcy judge Aug. 14, South Charleston, W.Va.-based Thomas Health System will emerge from bankruptcy and allow workers to retain their jobs, according to a news release sent to Becker's Hospital Review.
Thomas Health had filed for Chapter 11 bankruptcy protection in January. The health system cited many issues for its financial challenges, including macro issues affecting delivery of healthcare in the state, reduced reimbursements and patient outmigration.
Thomas Health will emerge from bankruptcy with support from a bond sale that will help pay the $145 million in debts at a discounted rate. Rosemawr Management, a New York-based investment adviser, is providing the exit financing.
Thomas Health officials expect the financing for the restructuring plan will be completed by mid-September.
"To be in the position to file a viable plan that will restructure and strengthen our balance sheet, while maintaining and continuing to treat our patients, especially during times as unprecedented as the last 90 days, is a testament to the hard work of our employees," Thomas Health President and CEO Daniel Lauffer said in the news release.
In the second quarter ended June 30, Thomas Health recorded a net loss of $6.1 million, compared to a loss of $2.3 million for the same quarter last year.
Additionally, the system said it has negative 120 days cash on hand, which is below the covenant of 55 days.
Thomas Health said its cash on hand is in breach because the system "was in default on its existing bond indebtedness at the end of fiscal year 2019."
In addition, the COVID-19 pandemic has negatively affected finances at Thomas Health. It said from mid-March to June 2020, it saw its volumes decline about 43.9 percent, which resulted in a weekly revenue decline of $23.9 million over 16 weeks.
Thomas Health said that volumes have slowly returned as of late April, but are still 10 percent to 15 percent below pre-pandemic levels.