Radiology provider Akumin filed for Chapter 11 bankruptcy protection on Sunday, seeking to wipe out $470 million in debt.
Under terms of the proposed transaction, the nearly half-billion-dollar loan balance will be converted to common shares of company stock, to be owned by lender Stonepeak. Akumin will transition to a privately held, rather than publicly traded, company upon completion of the transaction, with Stonepeak also investing $130 million in new money.
The bankruptcy filing ends months of turmoil for the Plantation, Florida-based imaging center operator, which has seen its stock value fall more than 80% over the past year. Debt has weighed down Akumin since its 2021 purchase of Alliance Healthcare Services for $820 million, with the company also recently experiencing a ransomware attack that shut down diagnostic operations.
“Today's announcement marks the successful culmination of a thorough strategic review process to ensure we have the right capital structure in place to support our long-term success,” Akumin Chairman and CEO Riadh Zine said in an Oct. 20 announcement. “As a result of this transaction, Akumin will move forward as a private company with increased financial flexibility and a strengthened balance sheet, better positioned to execute on our strategic plan to become the outpatient partner of choice for hospitals and health systems.”
To facilitate the transaction, Akumin and Stonepeak have entered into a restructuring agreement with most bondholders and revolving-credit lenders. Besides the debts being exchanged for stock, Akumin’s senior secured notes (maturing in 2025) will be exchanged for new ones with a higher interest rate and Aug. 1, 2027, due date. Additional debts owed in 2028 will remain on the same timeline but also see their interest rate increase, according to the announcement. Akumin’s existing stockholders, meanwhile, will receive $25 million and certain “contingent value rights” for their shares.
The radiology provider officially filed voluntary petitions for relief under Chapter 11 on Oct. 22 in the United States Bankruptcy Court for the Southern District of Texas. Akumin expects to obtain court approval of the transaction in the next 45 days and complete it after receiving certain regulatory approvals.
In an SEC filing, Akumin said it recently received written notice from the Nasdaq that the exchange will suspend trading of the company’s common stock on Oct. 26. That’s because Akumin has failed to maintain a minimum of $2.5 million in stockholders’ equity for continued listing on the capital market. The Nasdaq also notified Akumin in April that its stock’s closing bid price had been below $1 for 30 consecutive days, violating another requirement. Shares of the stock were up 145% as of late Monday. However, Akumin urged against trading its stock during the bankruptcy process, labeling such a move as “highly speculative” and posing “substantial risk.”
In the same filing, Akumin said it also appointed Ronald J. Bienias, MBA, as chief restructuring officer on Oct. 20. A managing director with consulting firm AlixPartners, Bienias is certified in insolvency, restructuring and company turnarounds. Akumin said it is paying AlixPartners a retainer in the amount of $250,000 to keep Bienias on hand during the process.
Akumin was first founded in 2015 and bills itself as the nation’s No. 2 overall provider of radiology services. The company operates a network of imaging centers, along with providing outsourced radiology and oncology services to 1,000 hospitals spanning 48 states.
Leaders stressed that their intent is to continue operating.
“Stonepeak is committed to working closely with Akumin as it moves through this process," James Wyper, senior managing director at New York-based Stonepeak, said in the announcement. “The critical nature of the services Akumin provides to health systems, hospitals, physician groups, and patients all across the country gives us confidence in the inherent value of the business, and we believe that this path forward will fortify the company's balance sheet as it looks towards its next phase of growth.”
Akumin is the second major radiology provider to file for bankruptcy this year after multispecialty physician group Envision Healthcare did the same in May.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.