CMS’ Financial Standards in Action
From: Orlando Sentinal
Rotech files Chapter 11 bankruptcy to rework nearly $545 million in debt
By Richard Burnett
Orlando-based Rotech Healthcare Inc. has declared Chapter 11 bankruptcy reorganization to rework its nearly $545 million in debt, the company said Monday.
Rotech officials said the action is expected to stabilize its balance sheet and clear the way to return to profitability. It lost $12.4 million on revenue of $114 million during the third quarter, the most recent results it has reported.
The distributor of home-health equipment announced last month its plan to declare Chapter 11 as part of deal approved by its creditors. It expects business to continue uninterrupted during the restructuring, which is estimated 90 to 150 days.
“Today’s action will enable us to create a capital structure that will provide a foundation for sustained profitabiliy and future growth,” CEO Steven P. Alsene said in a prepared statement.
Rotech has cited rising debt-interest costs and lower Medicare-reimbursement rates for its medical equipment.
The company also acknowledged last month it is under federal investigation, possibly related to Medicare over-charging. Rotech disclosed last year it had overbilled Medicare by $6.2 million because of a computer software problem. Rotech said it notified the government and refunded the money.
It is second time in 12 years that the distributor of home-health equipment has gone into bankruptcy reorganization. The last time was in 2000 when it was a unit of Integrated Health Services Inc., a nursing home management company that itself went into Chapter 11. Rotech later spun off from the former parent, a move that resulted in $575 million in debt financing.
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