Dive Brief:
Bankrupt CareMax may lay off 530 employees in the new year, according to notifications filed with Florida regulators last week. However, the ultimate decision as to which — if any — employees will be cut depends on pending sales of CareMax’s management services organization and its clinical centers business.
CareMax is seeking court approval to sell its management services organization to private equity-backed Revere Medical and its clinical centers to ClareMedica Health Partners. Should the deals go through, the buyers will have “sole discretion” over employment decisions, according to the Worker Adjustment and Retraining Notification notice.
The buyers may cut executives, according to the notice, which listed CareMax’s CEO, chief operating officer and chief medical officer among the executive roles that could be culled in January.
Dive Insight:
Medical center provider CareMax filed for Chapter 11 bankruptcy protections last month, stating that its close ties with Steward Health Care, which filed for bankruptcy in May, proved to be an unrecoverable drag on its finances.
CareMax was the exclusive Medicare managed service organization to Stewardship Health, Steward’s physician network, since 2022, according to court filings. Steward’s financial and operational distress caused significant challenges to CareMax’s profitability, and exacerbated other financial difficulties, including high labor costs and lags in reimbursement time.
The company has sought to offload most of its core assets since entering Chapter 11 restructuring. Revere Medical, the proposed buyer for its MSO business, purchased Stewardship Health from Steward’s bankruptcy auction in October.
ClareMedica is the stalking horse bidder for the vast majority of CareMax’s clinics and has set the floor price for auction at $100 million — $35 million in cash and $65 million in equity, according to a Nov. 19 securities filing from CareMax. The auction is expected to close later this month.
Any deals will require approval from the U.S. Bankruptcy Court for the Northern District of Texas, as well as other regulators. CareMax noted that its WARN notice was preemptive.
“Accordingly, although it is not certain at this point that WARN notice is required, the Company is providing conditional WARN notice in case the purchaser’s hiring decisions lead to a mass layoff or plant closure,” CareMax said.
Should the new buyers be approved, employees who have been offered a job at CareMax’s MSO business will be notified on or before Jan. 17, while most employees at clinical care centers will be notified of their employment status on or before Jan. 16.
Separately, CareMax has been scrutinized for maintaining close ties to Steward Health Care’s former CEO Ralph de la Torre, who owns a 15% stake in CareMax and is listed as a member of the company’s board of directors.
The executive is at the center of a federal corruption probe involving alleged fraud overseas. Last month, de la Torre had warrants served and phones seized as part of the ongoing investigation, according to a report from the Boston Globe.
The next week, Sen. Edward Markey, D.-Mass., sent letters to CareMax and Revere Medical, urging them to reconsider further relations with de la Torre and former Stewardship executives.
