May 26, 2025

Key developments:

• Filings in the last 2 quarters are up ~40% over historical averages since Q1 2019, with an uptick in large bankruptcies ($100M–$500M liabilities).
• Senior Care filings hit a two-year high in Q1 2025, while Hospital filings have doubled vs. recent norms.
• Pharmaceutical bankruptcies remain consistent, averaging 4 filings per quarter.

Healthcare in Mid-2025: Key Drivers & Outlook

• Interest rate and M&A volatility: Federal Reserve signals modest cuts despite a deteriorating outlook; Q1 2025 saw record lows in the number of announced hospital transactions.
• Labor and supply pressures: Workforce shortages, rising wages, and drug and supply costs continue to squeeze margins.
• Payor pressure: Medicare Advantage benchmark rates to increase by 5.1% in 2026 – the largest in 10 years and a windfall for insurers – but provider reimbursement remains under pressure.
• Policy and funding shifts: Potential federal Medicaid cuts (~$625 billion proposed over 10 years) and canceled federal healthcare grants impact the funding outlook.
• Hospital margin divide widening: Stronger systems show recovery (median Q1 margin: 3.3%), but weaker hospitals face escalating structural challenges.
• Shift to outpatient care: ~$50 billion in care delivery revenue expected to move from hospitals to lower-cost, freestanding sites.

For questions, comments or more information, contact Clare Moylan: cmoylan@gibbinsadvisors.com

About Gibbins Advisors www.gibbinsadvisors.com

Gibbins Advisors (“GA”) is a leading restructuring and transformation firm specializing in middle-market healthcare. Headquartered in Nashville, Tennessee, the firm was founded in 2019 by Ronald Winters and Clare Moylan and has grown to include operations across the United States and Australia.

The GA team of seasoned professionals combines restructuring experts and healthcare operations executives to lead and advise clients through times of challenge and transition. The firm excels in bringing clarity and resolution to complex and high stakes situations and maintains a strong track record in successful execution.