June 17 (Bloomberg) -- OnCure Holdings Inc., which provides equipment and management services to cancer clinics in three states, filed for bankruptcy blaming cuts in federal health-insurance payments.
OnCure, based in Englewood, Colorado, plans to sell itself at auction while under court protection, with an initial bid of $125 million from an undisclosed company, Chief Executive Officer Bradford Burkett said in a declaration filed June 15.
The company listed assets of $179.3 million and debt of $250.4 million in a filing in U.S. Bankruptcy Court in Wilmington, Delaware. OnCure began seeing fewer patients in 2011. On Jan. 1, the government-run Medicare and Medicaid programs cut reimbursement rates by 7 percent, Burkett said.
“These challenges left the debtors in a substantially overleveraged position,” Burkett said. The company said it has $210 million in senior secured notes maturing in 2017 with an interest rate of 11.75 percent.
OnCure is at least the third health-care company to file for bankruptcy with $200 million or more in debt since April. Rotech Healthcare Inc., a provider of home respiratory products, and Sound Shore Medical Center of Westchester, an affiliate of New York College of Medicine, also blamed Medicare cuts for their bankruptcies.
OnCure employs 370 people and provides services to 32 radiation-treatment centers in Florida and California and one in Indiana. GenStar Capital LLC took over the company in 2006 and owns more than 70 percent of it, according to court records.
Earnings before interest, taxes and depreciation, a common measure of financial strength, declined to about $94 million last year from $103 million in 2011, OnCure said.
Under the proposed auction rules, OnCure for two months will be free to seek a higher initial bid. The company plans to release details on the current bidder at a court hearing tomorrow, Burkett said.
The case is In re OnCure Holdings, Inc., 13-bk-11540, U.S Bankruptcy Court, District of Delaware (Wilmington).
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