Steward Health Care System LLC filed for bankruptcy on Monday as it seeks to finalize a rescue loan with its landlord, Medical Properties Trust Inc. The Massachusetts-based firm listed assets and liabilities of $1 billion to $10 billion in its Chapter 11 bankruptcy petition. As part of the restructuring deal, Medical Properties will provide initial debtor-in-possession funding of $75 million and an additional loan of up to $225 million if certain conditions are met.
Steward Health operates 33 community hospitals in nine US states with more than 30,000 employees. In recent months, the company has been struggling with liquidity issues, leading it to seek alternative sources of funding. The delay in the sale of its physician business unit forced it to look for an alternative source of financing.
The CEO of Steward Health cited higher costs and “insufficient reimbursement by government payors” as some of the factors leading to the Chapter 11 filing. The company’s Chief Executive Officer stated that by filing for bankruptcy, Steward Health will be better positioned to responsibly transition ownership of its Massachusetts-based hospitals and keep all hospitals open to treat patients while ensuring continued care and service for their communities.
Medical Properties fell 18% in premarket trading to $4 as of 6:30 a.m., New York time following news of Steward Health’s bankruptcy filing.