Medical Equipment

The Situation

  • Private equity-sponsored provider of durable medical equipment and related services to walk-in patients and referrals from hospitals and specialists
  • Company experienced revenue declines and did not sufficiently reduce its fixed-cost base to offset the impact
  • Liquidity was impaired by cutoff of significant claims reimbursement by a third-party insurance provider, and the increase in claims outpaced the company’s ability to review supporting documents; the impaired liquidity triggered financial-covenant defaults and a loan-workout protocol by the company’s lenders

Role(s)

  • Chief Restructuring Officer

The Work

  • Assessment of operations, identifying ways to improve profitability
  • Conducted on-site assessment of the corporate operations and the branch locations, identifying issues with development of recurring referrals and the need to consolidate branches to increase efficiency and reduce cost
  • Analyzed revenue cycle and cash-flow management and reporting, improving revenue-cycle management at the branch level and the need to focus more on four-wall location profitability
  • Engaged as CRO to work closely with management team to conserve cash through a turnaround; negotiated with company lenders to stabilize liquidity
  • Completed Chapter 11 reorganization of capital structure with new equity providing new capital

The Results

  • Company’s operating cash flow was stabilized with support from its lenders
  • Reorganization outcome allowed the company to avoid a complete liquidation and disruption of services to the communities as provided by its branch operations
  • CR3’s effective communication with financial stakeholders built support for the business, enabling the option of restructuring

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Overview

  • Healthcare
  • Performance Improvement

Engagement Team