Adeptus Health Inc (OTCMKTS:ADPTQ) is emerging from bankruptcy via an investment banker in the sector who specializes in distressed securities specific to healthcare. Adeptus is a leading patient-centered healthcare organization expanding access to the highest quality emergency medical care through its network of freestanding emergency rooms and partnerships with premier healthcare providers. They are working with Deerfield an investment management firm committed to advancing healthcare through investment, information and philanthropy.
The Q at the end of the listed symbol signifies that they are in bankruptcy or receivership. Once they emerge they will drop the Q at the end of their symbol. Few know that more than half of public companies who declare bankruptcy emerge on return to operations. This is good news for the common shareholders who are last in line when liquidations happen. This eventuality is reflected in the stock price in the chart below.
Adeptus Health Inc (OTCMKTS:ADPTQ) is the largest operator of freestanding emergency rooms recently announced that it has collaborated with Deerfield Management Company and certain of its other creditors on the terms of a comprehensive financial restructuring plan that is expected to significantly reduce the outstanding debt under the Company’s existing credit facility and better position Adeptus.
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As expected, to implement the restructuring, Adeptus filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, to pursue a plan of reorganization. While Adeptus Health’s wholly-owned subsidiaries are included in the court-supervised restructuring process, the joint venture entities to which Adeptus is a party are not part of the court-supervised process. Through this restructuring, it is expected that ownership of the Company will transition to Deerfield. Deerfield is a 23-year-old firm focused on advancing healthcare care through investment, information and philanthropy with over $8 billion in assets, and has been a long-term investor in Adeptus.
Importantly, all of the Company’s owned and joint-venture freestanding emergency rooms are continuing to operate as normal. These facilities are open and are continuing to serve patients with the same high-quality care and medical attention for which they are known.
Adeptus has also received a commitment from Deerfield for $45 million in debtor-in-possession (DIP) financing, which is expected to support the Company’s operations during the court-supervised restructuring process. Upon completion of the restructuring, it is also expected that Deerfield will provide the Company with additional funding, operational support and healthcare expertise, ensuring that Adeptus continues to offer patients the highest-quality care, and support employees, affiliated physicians and partners.
“Our partnership with Deerfield and the actions we are taking today are intended to strengthen Adeptus and enable us to continue our mission of providing access to the highest-quality medical care to the communities we serve,” said Gregory W. Scott, Chairman and Interim Chief Executive Officer of Adeptus. “Over the last several years, Adeptus has invested significantly to expand our facility footprint and respond to the growing demand for high-quality emergency medical care. While these investments have increased patient access, the associated expenditures have strained the Company’s financial resources. We believe that our partnership with Deerfield and the associated court-supervised restructuring process is the best path forward for Adeptus. As a long-term investor in the Company, Deerfield understands our business well. Their desire to deepen their relationship and commitment to our business, employees and partners demonstrates that they share our confidence in Adeptus and in our future prospects.”
Jim Flynn, Managing Partner of Deerfield Management, said, “We are pleased to enter into this partnership with Adeptus. Adeptus Health’s network of freestanding emergency rooms, employees and partners provides an excellent foundation for efficiently delivered, high-quality emergency medical care. We look forward to working closely with the Adeptus team and the dedicated physicians and medical staff working in its facilities to ensure that the Company reaches its full potential. Deerfield is committed to support the Company with capital, healthcare expertise and operational support.”
Mr. Scott continued, “As always, our facilities are open 24-7, and we are continuing to offer rapid access to board-certified physicians on-site. Importantly, we expect to continue working with our vendors and supporting the medical staff in our facilities as normal throughout this process. We thank our incredible team members for their hard work and dedication to our patients.”
Often the largest shareholder in a public company will be forced to take drastic steps to restructure the debt in a company which was poorly run or had a seminal event that created balance sheet chaos. In the case of Adeptus Health Inc. (NYSEMKTS: ADPTQ) they filed a number of customary motions seeking court authorization to continue to support its business operations during the court-supervised process, including uninterrupted payment of employee wages and benefits. The Company intends to pay vendors for goods and services provided after the filing date, April 19, 2017. The Company expects to receive court approval for these requests.
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