21st Century Oncology, which bills itself as the world's largest operator of cancer treatment centers, filed for Chapter 11 bankruptcy on Thursday, citing changes in insurance reimbursement rates and uncertainty caused by political changes.
The Fort Myers,
Paul Rundell, the interim chief executive officer, said in a statement the company entered bankruptcy with an agreement with lenders and bondholders that would reduce its debt by $500 million.
The company's lenders agreed to provide $75 million for working capital during its bankruptcy and a group of creditors agreed to invest $75 million into the reorganized business.
The new investment is being led by funds affiliated with Beach Point Capital Management, Governors Lane, JP Morgan Investment Management Inc, Oaktree Capital Management, Roystone Capital Management and HPS Investment Partners, according to a court filing.
Rundell blamed the bankruptcy on declining levels of revenue per treatment, the cost of complying with regulations regarding electronic records and the cost of litigation and legal settlements.
The company has paid around $55 million to settle allegations it billed government programs for services that were not medically necessary, according to Rundell's court filing. The company did not admit to wrongdoing as part of the settlements, Rundell said.
21st Century Oncology is also being investigated over a data breach involving 2.2 million patients.
"A changing political landscape has injected uncertainty into the health insurance market," Rundell said in a court filing.
U.S. President Donald Trump and his Republican allies have pledged to roll back the 2010 Affordable Care Act, known as Obamacare, which brought sweeping changes to the U.S. healthcare market. About 20 million Americans gained insurance under Obamacare.
21st Century Oncology was founded in 1983 by a group of physicians and was publicly traded as Radiation Therapy Services until it was acquired in 2008 by Vestar Capital Partners for around $1 billion.
It pulled plans to return to the stock market in 2014 and instead raised $325 million with an investment from the Canada Pension Plan Investment Board.