American Hospice Management Holdings has filed for bankruptcy protection amid “severe financial stress,” leaving the hospice care provider six weeks to sell its business.
Already, Hospice Partners of America made a “stalking horse” bid to acquire American Hospice’s operations in Virginia and Texas, leaving operations in Arizona, Florida, Georgia, New Jersey and Oklahoma up for grabs. The sale process must close by April 30, according to the Jacksonville, Florida-based company.
American Hospice has searched for a buyer since March 2013, after agreeing to pay $12 million to resolve allegations of making false claims to Medicare for ineligible hospice services, Dow Jones reported. But the company noted that an expedited sale through a bankruptcy proceeding would now be the best option to “best preserve the underlying value of its operations and maximize the value of [its] assets” for creditors and shareholders.
“In the past few years, we have found ourselves working under the burden of an increasingly challenging regulatory environment coupled with rapidly changing market conditions,” American Hospice CEO Scott Mahosky said in a statement. “We now face the undeniable reality that selling our operations to those with strong capital structures will prove a better outcome for all of our stakeholders.”
In 2015, American Hospice lost $4.7 million on revenue of about $57 million. Earlier this month, 2000 Riverside Capital Appreciation Fund purchased $8 million of the company’s secured debt. American Hospice also owes $5.5 million to the Department of Justice and roughly $4.2 million to trade vendors.
Written by Kourtney Liepelt