Georgia ProtonCare Center - Chapter 11 Case Summary

Business Description

Georgia ProtonCare Center, Inc. (the "Debtor" or the "Company") owns and operates the only proton therapy cancer treatment center in Georgia, located at 615 Peachtree St. NE, Atlanta. The Facility is one of only 47 operating proton therapy centers in the United States.

• The Company is a nonprofit entity organized under Section 501(c)(3) of the Internal Revenue Code, with Provident Resources Group, Inc. ("Provident"), a nonprofit Georgia corporation, serving as its sole member.
• The Company's charitable purposes include acquiring, constructing, and operating the Facility; providing radiation oncology services using proton beam therapy; conducting and supporting cancer treatment research; and advancing the public health and general welfare of Georgia residents and the surrounding region.

Proton therapy provides pinpointed delivery of radiation to treat tumors requiring targeted precision due to their location and proximity to vital structures. The treatment reduces and avoids radiation delivery to non-cancerous areas, which may help mitigate side effects during treatment and reduce longer-term risks such as damage to the heart or lungs and secondary cancers.

• Proton therapy is particularly beneficial for children, whose growing bodies are most at risk for radiation side effects.
• The Facility treats many types of cancer and non-cancerous tumors, including abdominal tumors, brain and spine tumors, breast cancer, esophageal cancer, gynecologic cancer, head and neck cancer, lung cancer, lymphoma, pediatric cancer, pelvic tumors, prostate cancer, and sarcoma.

In fiscal year 2024, the Company recognized total operating revenue of $43.9 million, adjusted EBITDA of $6.5 million, and negative net income of $31.9 million. Through November of fiscal year 2025, the Company recognized total operating revenue of $39.6 million, adjusted EBITDA of $2.5 million, and negative net income of $33.7 million.

The Company directly employs one staff accountant, who has been paid current through the Petition Date. All other personnel working at the Facility are employed by Emory Healthcare Inc. and The Emory Clinic Inc. (together, "Emory") pursuant to a management agreement.

---

Corporate History

The Facility was not originally developed by the Debtor or Provident. In 2010, a private investor group formed Georgia Proton Treatment Center, LLC ("GPTC") to oversee the construction and development of the Facility, with Emory serving as the clinical partner pursuant to an Amended and Restated Master Services Agreement.

• Construction was suspended in 2015 due to lack of funds, leaving a partially constructed and completely inoperable Facility.
• Provident was subsequently approached to complete development of the Facility.

Provident Acquisition and Facility Completion

In July 2017, Provident acquired the assets of GPTC, including the partially constructed Facility. The acquired assets included:

• The site in Atlanta;
• Purpose-built space for five proton treatment rooms;
• Diagnostic, treatment, planning, and imaging equipment;
• A parking deck;
• Equipment contracts; and
• The Certificate of Need issued by the State of Georgia for the Facility.

Construction resumed in July 2017 following Provident's acquisition of the GPTC assets and the issuance of bonds. Upon completion of construction and successful installation of the major proton treatment equipment, the Debtor was incorporated by Provident, and the Facility and other acquired assets were transferred to the Debtor.

• The first patient was treated at the Facility in December 2018, and thousands of patients have been treated there since.
• Provident remains the sole member of the Debtor.

Governance Structure

The Debtor was incorporated in 2017 and is governed by a Board of Directors comprised of three members: Kenneth Becker, Steven Hicks, and Debra Lockwood. The Company has six officers in total, including an Interim CFO and Interim COO.

---

Operations Overview

The Company operates the Facility through a management structure that outsources substantially all clinical and administrative functions to third parties. Emory provides clinical care, patient care, and related services through the Emory Management Agreement, while nearly all other services—including billing and collections, marketing, corporate support, and maintenance of the proton therapy system—are outsourced to additional third-party providers.

Emory Management Agreement

Pursuant to the Emory Management Agreement, Emory provides clinical and administrative management services for the Facility's day-to-day operations, including:

• Managing sales and marketing;
• Clinical care and staffing;
• Human resources; and
• Compliance with applicable state regulations governing the provision of medical care.

The Company pays Emory the actual costs of services rendered based on the Facility's annual budget approved by the Debtor. Outstanding amounts due to Emory for actual costs of services total approximately $6.8 million as of the Petition Date.

• The Emory Management Agreement also required payment of a royalty equal to 3% of revenues and an administrative services fee (together, the "Emory Fees"), payable to the extent of available funds.
• Unpaid Emory Fees totaling approximately $22.3 million have been subordinated to other creditors under the Trust Indenture. Due to the contractual waterfall schedule, the condition precedent to payment of these fees never occurred.

Asset Management Agreement

Pursuant to the Asset Management Agreement with Provident, Provident provides administrative and support services for the Facility, including data and information processing, accounting, financial reporting, and financial planning and budgeting.

• Provident received a $750,000 fee in 2017 for asset development services, paid at closing as part of the project costs.
• Provident receives an annual base fee of approximately $380,000, increasing at 3% per year, with half due in monthly installments and the other half accruing as a subordinate liability under the Trust Indenture.
• Provident also receives an additional annual fee equal to 1.2% of revenues.
• To date, Provident is owed approximately $7.2 million in subordinated Asset Management Fee payment obligations.

Regulatory Environment

Many aspects of the Company's operations are subject to regulation by Georgia authorities, including the City of Atlanta, the Georgia Department of Natural Resources, and the Georgia Department of Community Health. Additionally, nearly every aspect of operations—including services provided to patients as well as billing and collections—are subject to rules and regulations promulgated by the U.S. Department of Health and Human Services' Centers for Medicare & Medicaid Services.

---

Prepetition Obligations

As of the Petition Date, the Debtor reports approximately $550.2 million in total funded debt obligations, comprising $242.7 million in Senior Bond principal, $207.5 million in Subordinate Bond principal, approximately $100 million in accrued and unpaid interest across all bond tranches, and $29.5 million in other unsecured obligations. The Company's prepetition capital structure is summarized below:

Senior Bonds

• Approximately $242.7 million in aggregate principal is outstanding under the Senior Bonds, with an additional $67.6 million in accrued and unpaid interest as of January 1, 2026. The Senior Bonds were issued on July 10, 2017 by the Atlanta Development Authority and consist of two series:
  • Series 2017A-1 Bonds: Tax-exempt current interest revenue bonds with an initial principal amount of $219.4 million, proceeds of which were used to refinance and finance a portion of the cost of acquiring, constructing, and equipping the facility, fund a debt service reserve, fund interest, and pay issuance costs.
  • Series 2017A-2 Bonds: Taxable convertible capital appreciation draw-down revenue bonds with an initial principal amount of $16.1 million, proceeds of which funded interest, certain reserves, and a portion of issuance costs.

Subordinate Bonds

• Approximately $207.5 million in aggregate principal is outstanding under the Subordinate Bonds, with $32.4 million in accrued and unpaid interest. These bonds carry a principal balance at maturity of approximately $398.2 million. The Subordinate Bonds comprise three series:
  • Series 2017B-1 Bonds: Tax-exempt convertible capital appreciation revenue bonds with an initial principal amount of $77 million, issued to fund a portion of the cost of acquiring membership interests in Georgia Proton Treatment Center, LLC.
  • Series 2017B-2 Bonds: Tax-exempt capital appreciation revenue bonds with an initial principal amount of $20 million, issued to refinance a portion of the facility costs.
  • Series 2017C Bonds: Tax-exempt junior subordinate capital appreciation revenue bonds with an initial principal amount of $36 million, also issued to refinance a portion of the facility costs.

Security for Bond Obligations

• The Bonds are secured by liens on substantially all of the Debtor's assets, including:
  • The real property where the facility is located, together with all buildings, structures, improvements, and related property rights.
  • All leases, tenant contracts, rental agreements, rents, revenues, and other benefits accruing from the property.
  • Assigned contract documents, including agreements with the design architect and contractor, the proton system purchase and operations agreements with Varian Medical Systems, Inc., a service mark licensing agreement with Emory, and a billing management agreement with MMBC, LLC.
  • A deposit account subject to a Restricted Account Agreement.
• UMB Bank, National Association serves as the Bond Trustee, having succeeded U.S. Bank, N.A. effective January 7, 2021.

Unsecured Obligations

• The Debtor has approximately $29.5 million in other unsecured obligations, including amounts owed to vendors and trade creditors.

---

Events Leading to Bankruptcy

Revenue Shortfalls and Reimbursement Challenges

• Despite operating one of the busiest proton therapy centers in the United States—treating over 1,000 cancer patients annually—the Debtor's patient treatment revenues have proven insufficient to meet its financial obligations.
  • The Company's primary revenue streams include Medicare, Medicaid, commercial insurance, and private pay, none of which have generated adequate income to service its significant debt load.
  • Ongoing reimbursement rate disputes with the Centers for Medicare & Medicaid Services (CMS) and its Medicare Administrative Contractor, as well as with commercial insurance payors, further constrained the Debtor's cash flow.
  • As a result, the Debtor was unable to fund debt service payments due under the Bond Financing Documents.

Operational Initiatives and Inflationary Pressures

• The Debtor implemented various measures to improve its financial position over the past several years:
  • Efforts to increase patient volume were pursued alongside cost reduction initiatives.
  • However, the savings generated by these measures were largely offset by persistent inflationary pressures on operating costs, leaving the Company unable to meaningfully improve its liquidity position.

Chapter 11 Objectives and Sale Process

• Faced with an unsustainable debt burden and the ongoing operating expenses necessary to maintain life-saving proton therapy treatments, the Debtor filed for Chapter 11 to preserve its assets and operations while pursuing a going-concern sale process.
  • The Debtor's primary objective throughout the sale process is maintaining continuity of care for cancer patients at the Facility.
• To anchor the sale process, the Debtor negotiated a stalking horse asset purchase agreement with Emory University, by and on behalf of Emory University Hospital of Midtown:
  • Emory has been providing clinical and certain administrative services for the day-to-day operations of the Facility under an existing management agreement for several years.
  • The Stalking Horse APA is the product of extensive diligence and arm's-length bargaining, with alignment around the central goal of ensuring uninterrupted patient treatment while preserving and monetizing the Debtor's assets.
  • A majority of the holders of the Senior Bonds, acting through the Bond Trustee and its advisors, support consummation of the proposed going-concern sale, subject to an overbid process in the Chapter 11 Case.