(Bloomberg) -- GenesisCare, an Australia-based operator of cancer treatment centers, filed for bankruptcy and will attempt to sell its struggling US operations.
The health-care provider said in a statement that it filed a Chapter 11 petition in Texas and secured commitments for $200 million of financing to help the company fund itself in bankruptcy. The filing allows the business to keep operating while it works out a plan to repay its debts.
GenesisCare also plans to explore the separation of its US business from operations in Australia, Spain and the UK. While the company’s business in Australia and the UK is growing, the US operation “is making progress on its turnaround strategy” and seeking third-party strategic or financial partners, according to the statement.
GenesisCare Chief Executive Officer David Young said in statement submitted to the court Thursday that the company will attempt to sell its U.S. operations while it works to get additional capital from its lenders to grow its profitable businesses in Europe and Australia. Young said GenesisCare’s US business is being funded by its operations in the UK, Spain and Australia and that has stressed the company’s liquidity
Despite the challenges, Young said GenesisCare has created a detailed turnaround plan to make the US operations profitable but the business lacks the capital needed to make the necessary investments. Young said GenesisCare will explore other alternatives for the US business beyond attempting to sell the operations in Chapter 11.
The financing GenesisCare secured to fund its bankruptcy provides the company with $200 million and rolls-up $600 million in existing debt, vaulting that debt to the top of the Chapter 11 repayment line. GenesisCare comes to bankruptcy with roughly $1.7 billion in long-term debt, according to court documents.
The company’s debt traded at deep discounts in the months before the bankruptcy filing. A €500 million ($534 million) GenesisCare loan was trading at around 30 cents on the euro earlier this year after earnings slumped, and the debt remained on a restrictive white list that cut off demand from distressed debt funds.
GenesisCare, backed by China Resources Pharmaceutical Group Ltd. and private equity firm KKR Group Co., operates at more than 400 locations. It expanded into Texas, Arkansas, Oklahoma and Missouri when it acquired 21st Century Oncology Inc. in 2020. The company is the largest global provider of radiotherapy cancer treatments, according to its website.
Young said GenesisCare had difficulty integrating 21st Century Oncology, saying its cancer treatment centers were disconnected and lacked a central information technology system and used expensive, outdated equipment. GenesisCare said it has also faced more competition in Florida after state lawmakers passed legislation voiding non-compete agreements for physicians who have opened rival locations, he said.
The case is Genesis Care Pty Limited, 23-90614, U.S. Bankruptcy Court for the Southern District of Texas.
(Updates with CEO court statement in fourth paragraph and details from the statement throughout)
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