HME Provider Files for Bankruptcy, Blames Competitive Bidding

Landauer Healthcare Holdings, Inc. and its affiliates filed for Chapter 11 bankruptcy protection on August 16, citing the Center for Medicare & Medicaid Services (CMS) competitive bidding process as a contributing factor to its financial struggles along with a failed sale to competitor Allcare.

The Mount Vernon, N.Y.-based home medical equipment provider voluntarily filed for debt relief in the Delaware Bankruptcy Court and listed assets and liabilities as ranging between more than $50 million to $100 million. 

Landauer’s HME business provides services to more than 240,000 customers in eight states, with about 650 employees. 


The company cited the competitive bidding program as contributing to losses that resulted in financial and operational issues in the August affidavit. The company was notified in January 2013 that it hadn’t won any competitive bidding contracts and therefore would not be an approved supplier for new Medicare patients after July 1, 2013.

“As a result, the Company’s revenues from this source is expected to decrease substantially—if not evaporate entirely—which was one of the primary factors in its need to seek bankruptcy protection,” says the affidavit.

The impact of not winning any bids through the CMS competitive bidding program is likely to result in a decrease in annual revenues of about $26 million.


“Almost immediately after it took effect on July 1, 2013, the Debtors’ ineligibility to serve Medicare patients began to impact the Debtors’ ability to attract new customers,” the filing says. 

As of the petition date, Landauer owed about $29.4 million in senior secured loans, secured by liens on the company’s assets. Another approximately $15 million is owed in unsecured debt to a variety of trade creditors, says the affidavit. 

The company unsuccessfully sought to sell the business in 2012 and 2013, including a failed transaction to sell its assets to competitor Allcare Medical. 

“The failed Allcare transaction, and the events that followed—including Allcare’s improper solicitation and hiring away of the Debtors’ senior employees—irreparably harmed the Debtors’ business and were a primary cause of the Debtors’ need to seek bankruptcy protection,” said the filing. 

View the affidavit or the filing, obtained by MorrisJames LLP. 

Written by Alyssa Gerace