Commences Chapter 11 Proceedings to Effectuate Expedited Sales of Rhode Island Hospitals
Company Continues to Work with the Commonwealth of Pennsylvania to Agree to Terms for Sale of the Crozer-Chester Medical Center
Company is Engaging with Key Stakeholders to Finalize Necessary Funding to Support Business During Restructuring Process
Company is Operating Uninterrupted Across All Regions as Patients Continue to Receive High-Quality and Personalized Care
PHP Holdings, LLC and Related Subsidiaries Are Excluded from Chapter 11 Proceedings; Expect to Close Sale to Astrana Health, Inc. in Mid-2025
LOS ANGELES, January 12, 2025--(BUSINESS WIRE)--Prospect Medical Holdings, Inc. ("Prospect Holdings" or the "Company") today announced that it is proceeding on a strategic pathway to realign its organizational focus outside of California, including pursuit of an agreement to sell the Roger Williams Medical Center and Our Lady of Fatima Medical Center in Rhode Island to Centurion Foundation, Inc. (the "Rhode Island Transaction"). Prospect Holdings is also continuing to engage with key stakeholders outside of Rhode Island and to work with the Commonwealth of Pennsylvania to agree on terms for the divestiture of the Crozer-Chester Medical Center (the "Pennsylvania Transaction" and, together with the Rhode Island Transaction, the "Hospital Transactions").
By engaging with stakeholders and implementing the Hospital Transactions, Prospect Holdings is prioritizing its core strength -- focusing on operating community hospitals in California, providing vital care to underserved communities, and promoting patient and physician continuity -- while ensuring these hospitals outside of California continue operations with proper financial support.
To effectuate the paths forward and the Hospital Transactions in an expedited timeframe, and to ensure continued provision of critical and tailored healthcare, Prospect Holdings, together with certain of its subsidiaries, initiated voluntary chapter 11 proceedings in the United States Bankruptcy Court for the Northern District of Texas (the "Bankruptcy Court"). The transactions will be conducted in accordance with the provisions of the United States Bankruptcy Code.
PHP Holdings, LLC and its related subsidiaries, including Prospect Health Plan, Inc., Prospect Medical Systems, LLC and its affiliated medical groups in California, Arizona, and Texas, Gateway Medical Center, and Foothill Regional Medical Center, are not parties to the chapter 11 proceedings and expect to close the previously announced sale to Astrana Health, Inc. in mid-2025.
Throughout the chapter 11 process, Prospect Holdings’ hospitals, medical centers, and physicians’ offices will remain open, and patient care and services will continue uninterrupted.
Von Crockett, Prospect Holdings’ Chief Executive Officer, said, "Today’s actions represent an important step forward in our longstanding commitment to best serve the interests of our patients, physicians, employees, and communities. Divesting our operations outside of California will ensure that they receive necessary financial support so that the communities that rely on those facilities will maintain continued access to highly coordinated, personalized, and critical healthcare services long into the future."
Mr. Crockett continued, "Through this process, Prospect Holdings will regain its financial footing as we rededicate ourselves to our original mission of serving the community. We look forward to working alongside our stakeholders to implement these strategic transactions, and are confident that through these actions, Prospect Holdings will be better positioned to prioritize and execute its core strengths."
Additional Information About the Bankruptcy Court-Supervised Process
Prospect Holdings is continuing to engage with its key stakeholders to finalize necessary funding for the duration of the chapter 11 process. Upon Bankruptcy Court approval, any contemplated financing, together with cash generated from the Company’s ongoing operations, is expected to provide sufficient liquidity to support the Company while it considers paths forward and works to complete the Hospital Transactions.
The Company will file a number of customary motions seeking Bankruptcy Court approval to support its operations, including the continued payment of employee wages and benefits, without interruption. These motions, once approved, will help facilitate a smooth transition into the restructuring process and ensure the Company’s hospitals, medical centers, and physicians’ offices can continue providing uninterrupted service to patients. The Company expects to receive Bankruptcy Court approval for these requests shortly. Prospect Holdings also intends to pay vendors in full under normal terms for goods and services provided after the filing date.
Additional information regarding the Bankruptcy Court-supervised sale and restructuring process can be found at www.pmhrestructuring.com. Bankruptcy Court filings and other information related to the proceedings are available on a separate website administrated by the Company’s claims agent, Omni Agent Solutions, Inc. ("Omni"), at https://omniagentsolutions.com/Prospect, by calling Omni toll-free at (888) 550-3239 (or (818) 510-3746 for calls originating outside of the U.S. or Canada), or by sending an email to ProspectInquiries@OmniAgnt.com.
Advisors
Sidley Austin LLP is serving as legal counsel, Houlihan Lokey Capital Inc. is serving as investment banker, and Alvarez & Marsal North America, LLC is serving as financial advisor to Prospect Holdings.
About Prospect Medical Holdings, Inc.
Prospect Medical Holdings, Inc. consists of hospitals and affiliated medical groups working for the benefit of every person who comes to us for care. Our comprehensive networks aim to provide coordinated, personalized care to California, Connecticut, Pennsylvania, and Rhode Island.
Cautionary Statement Concerning Forward-Looking Statements
This press release contains forward-looking statements. These forward-looking statements include statements regarding the process and potential outcomes and timing of the Company’s chapter 11 proceedings, the Hospital Transactions, any contemplated financing and the Bankruptcy Court’s approval thereof, the Company’s ability to continue to operate as usual during the chapter 11 proceedings and the Company’s ability to pay for continuing obligations. Words such as "anticipate," "believe," "budget," "contemplate," "continue," "could," "envision," "estimate," "expect," "guidance," "indicate," "intend," "may," "might," "plan," "possibly," "potential," "predict," "probably," "pro forma," "project," "seek," "should," "target," or "will," or the negative or other variations thereof, and similar words or phrases or comparable terminology, are intended to identify forward-looking statements. These forward-looking statements reflect the Company’s expectations, plans or forecasts of future events and views as of the date of this press release. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements.
Important risks and uncertainties that could cause the Company’s actual results and financial condition to differ materially from those indicated in forward-looking statements include, among others, the Company’s future capital requirements and sources and uses of cash, including funds to satisfy its liquidity needs; the Company’s ability to fund its planned operations and its ability to continue as a going concern; the adverse impact of the chapter 11 proceedings on the Company’s business, financial condition, and results of operations; the Company’s ability to maintain relationships with patients, employees, doctors, health plans and other key payers and other third parties as a result of the chapter 11 proceedings; the effects of the chapter 11 proceedings on the Company and the interests of various constituents; the Company’s ability to obtain court approvals with respect to motions filed or other requests made to the Bankruptcy Court throughout the course of the chapter 11 proceedings; and risks associated with third-party motions in the chapter 11 cases. All information provided in this press release is as of the date hereof, and the Company undertakes no duty to update or revise this information unless required by law, and forward-looking statements should not be relied upon as representing the Company’s assessments as of any date subsequent to the date of this press release.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250111107789/en/
Contacts
Meaghan Repko / Michael Freitag / Richard M. Goldman
Joele Frank, Wilkinson Brimmer Katcher
PMHMedia@joelefrank.com
212-355-4449
