Redeemer Health - Chapter 11 Case Summary

Business Description

Redeemer Health ("RH") is a Pennsylvania non-profit holding company. RH and its Debtor affiliates (collectively, the "Debtors"), together with their non-Debtor affiliates and subsidiaries (collectively, the "Company"), run a Catholic health care and social services system serving southeastern Pennsylvania and neighboring areas of New Jersey. The Company was founded by the Sisters of the Redeemer and follows the Ethical and Religious Directives for Catholic Health Care Services approved by the United States Conference of Catholic Bishops.

The Company has 54 locations. It operates an acute care hospital, Holy Redeemer Hospital (the "Hospital"), and five senior living and residential services facilities, and employs over 155 physicians and 3,200 other employees. Its businesses fall into three lines:

• acute care, centered on the Hospital and its physician network
• home care and hospice
• residential and life care, covering senior living, subsidized housing and social services

Across its health care services, RH focuses in particular on cancer care, women's health, cardiovascular health and orthopedics. For fiscal 2026 through April 30, 2026, RH reported consolidated total revenues of $369.2 million.

The Debtors include RH and Holy Redeemer Health System ("HRHS"), which operates the Hospital, along with physician practice, New Jersey home care and holding company subsidiaries. Many of the life care entities are not Debtors, and neither is the real estate holding company HRH Management Corporation ("HRH Management"). The Debtors are using Chapter 11 to exit acute care and reorganize their post-acute and life care operations.

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Corporate History

Founding and Sponsorship

The Company traces its origins to 1924, when its founders, the Sisters of the Redeemer, came to America to care for the sick and the poor in their homes. That Catholic mission has since grown to cover:

• acute care, ambulatory care and physician practices
• home health and hospice
• skilled nursing, personal care and memory care
• retirement and independent living communities
• low-income housing
• community living for the homeless and for individuals with intellectual and developmental needs

The Sisters provide ministerial social services through Redeemer Ministries, a public juridic person under Canon Law. Its members are three Sisters of the Redeemer and six lay members, each of whom recently began the third of three consecutive terms. Redeemer Ministries oversees the organization's Catholic mission. It has no assets or liabilities and is not a Debtor. RH and its Board of Trustees have ultimate oversight of the Company's operations. James Logue joined the Company in February 2025 as Chief Transformation Officer of HRHS and is now RH's President and CEO.

Debtor Entities

RH has no employees or direct operations of its own. It is the sole or majority owner or member, directly or indirectly, of each Debtor:

• HRHS — Wholly owned by RH. It runs the Hospital, PA Home Health and Hospice, St. Joseph Manor and The Lafayette as divisions.
• HR Physician Services ("HRPAS") — Does business as Holy Redeemer Physician and Ambulatory Services and is wholly owned by HRHS. It employs and contracts the physicians and other providers who deliver the Company's health care services. HRPAS is the majority member of two jointly owned practices:
  • Orthopaedic Surgery & Rehabilitation Associates — An orthopedic practice owned 70% by HRPAS, with its physician members owning the rest. The April 2026 financial statements list it among discontinued operations.
  • PGC Acquisition — A behavioral health practice owned 51% by HRPAS. Philmont Guidance Center, PC, a doctor-owned entity, holds the remaining interests. PGC Acquisition and Philmont Guidance Center both ceased operations on March 7, 2025.
• Redeemer Cancer Care Physicians Network — An oncology specialty physician practice owned and operated by RH. It has ceased operations.
• New Jersey home care entities — All wholly owned by RH. Over the past several years, RH has sold most of its New Jersey home care assets to Bayada Home Health Care.
  • Holy Redeemer Home Care, Inc. (NJ) ("South") — Continues to operate in Southern New Jersey.
  • Holy Redeemer Hospice Inc. ("Hospice") — Continues to operate.
  • Visiting Nurse & Health Services Inc. (NJ) — Provided visiting nurse, home care and hospice services in several Northern New Jersey counties. It is no longer operating.
  • Holy Redeemer Visiting Nurse Agency, Inc. — Ceased operations in 2024 after selling its assets to Bayada. The sale included its certificate of need ("CON"), the New Jersey Department of Health approval a home health agency needs to start, expand or license its services.
  • VNA Home Care of Mercer County — Stopped operating in May 2024 but remains an active business so it can keep its CON. A pending asset purchase agreement for the CON is stayed until a federal moratorium is resolved.
• Redeemer Skilled Nursing Care – Holding Company — Formed as a holding company intended to own St. Joseph Manor and The Lafayette and to serve as RH's operational hub for active adult living, independent living, personal care, memory care, long-term care and short-term rehabilitation services. Because of organizational issues, ownership of the two facilities was never transferred to it, and they remain divisions of HRHS.

Non-Debtor Affiliates

• HRH Management — A real estate holding company owned by RH. It owns Condominium Unit 2, the two medical office buildings on that unit next to the Hospital, and other professional offices and facilities in Bucks and Montgomery Counties, PA. It also owns The Villages and Pine Valley Medical Office Building, L.P. and a 40% interest in 201 Veterans, LP. HRH Management is the member of Villages at PV MOB LLC, which owns a 99% joint venture interest in Villages at PV MOB LP, Redeemer Village, Redeemer Village Housing LLC and Redeemer Village Housing Managing Member LLC. Those entities provide low-income rental housing for the elderly and disabled.
• Life care subsidiaries — RH's non-Debtor subsidiaries Little Flower Manor, The Drueding Center and Holy Redeemer – Dale Zipley Homes for Independent Adults also provide residential and life care services.
• Joint ventures — HRHS owns Holy Redeemer Active and Retirement Living Communities, Inc. (a for-profit corporation) and Holy Redeemer Active and Retirement Living Communities (a non-profit corporation) together with an unrelated third party. HRHS also holds an investment in Rothman Ortho Specialty Hospital, LLC, an orthopedic and sports medicine hospital in Bensalem, PA.

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Operations Overview

The Debtors employ approximately 2,770 full-time, part-time and temporary employees. They also engage 150 independent contractor physicians, consultants and service providers, either individually or through their medical practices. RH's consolidated results by business line for fiscal 2026 through April 30, 2026 were as follows ($ in thousands):

Business line	Patient service revenue	Operating gain (loss)
Hospital	$175,200	$(18,630)
HRPAS (physician practices)	40,002	(19,353)
Other healthcare (joint ventures)	9,561	355
Senior care and living	59,152	(571)
Home care and hospice	36,882	1,395
Corporate	–	2,229
Total	$320,797	$(34,575)

Acute Care

The Hospital is a licensed 239-bed general acute care hospital with an attached medical office building, providing emergency, inpatient, outpatient and ambulatory care. Its obstetrics and gynecology program has handled more than 11,000 deliveries since 2021. The Hospital runs a neonatal intensive care program in partnership with Children's Hospital of Philadelphia and has academic nursing affiliations with local colleges and universities.

Beyond the Hospital's own services, the acute care operations provide ancillary services such as rehabilitation and respiratory therapy, along with administrative, management and physician services, and to a smaller extent hold interests in non-Debtor joint ventures that develop real property into low-income housing for seniors, disabled persons and others in need.

In RH's internal reporting for fiscal 2026 through April 30, 2026, the physician medical group's women's health practice lost $6.9 million and its imaging practice lost $3.0 million at the operating line, and hospital-based physicians lost $5.3 million.

Home Care and Hospice

HRHS's PA Home Health and Hospice division provides in-home skilled nursing, therapy, palliative and hospice services to patients in Pennsylvania and New Jersey. In New Jersey, South provides home-based skilled nursing, therapy, social work and other health services in several southern counties, and Hospice provides home-based end-of-life care across the state. RH also runs "Healthy Families" programs in Union and Cape May Counties, funded by the State of New Jersey, which give new and expectant parents in-home education and resources.

Senior Care and Life Care

HRHS runs two senior care facilities:

• St. Joseph Manor — 296 nursing beds and 62 personal care beds, providing long-term and short-term rehabilitation care.
• The Lafayette — An independent living, residential personal care and nursing facility with 304 residential units and 70 nursing beds.

Together with its non-Debtor affiliates, the residential and life care division offers a full continuum of care, from active adult and independent living through personal care, memory support, skilled nursing and rehabilitation. It also provides low-income housing, life skills programs, a food pantry and a thrift shop for people facing homelessness, abuse and financial difficulty, as well as for the elderly. Rent for residents of the low-income and disabled housing run through Redeemer Village Housing LLC is subsidized under the Section 8 program of the U.S. Department of Housing and Urban Development.

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Prepetition Obligations

Bond Debt

HRHS and HRPAS form the obligated group under a Master Trust Indenture with The Bank of New York Mellon Trust Company, N.A. as master trustee (the obligations under it, the "Bond Debt"). The indenture is dated September 15, 1997 and was most recently supplemented by an Eighth Supplement dated October 2016. UMB Bank, N.A. recently replaced Bank of New York Mellon as master trustee.

The Declaration gives two estimates of the prepetition Bond Debt balance: approximately $78 million in its description of the bond obligations, and approximately $77 million in its summary of the cash collateral motion. The Bond Debt is secured by:

• a mortgage on Condominium Unit 1, the parcel owned by HRHS on which the Hospital operates
• liens on certain accounts and receipts of HRHS and HRPAS
• the proceeds of that collateral

The master trustee has filed UCC-1 financing statements against both HRHS and HRPAS.

Other Secured Debt

HRHS owes less than $4,000 to Cencora and the pharmaceutical companies now part of it (collectively, the "Pharm Companies") for pharmaceuticals and related supplies. That debt is secured by liens on the products supplied, their proceeds and HRHS's accounts, and the Pharm Companies have filed UCC-1 financing statements against HRHS. Several equipment financing companies also hold UCC-1 liens on certain medical equipment sold to HRHS.

Unsecured, Malpractice and Self-Insurance Obligations

RH's consolidated accounts payable were $18.3 million at April 30, 2026, up from $12.2 million in the audited June 2025 balance sheet; at the obligated group level, accounts payable rose to $17.4 million from $8.6 million. The Debtors have stayed current on payroll to employees and independent contractors, including withholdings and payroll taxes, although, because of the timing of the filing, approximately $8.4 million of prepetition compensation remained accrued and unpaid.

The Debtors' malpractice liability and defense costs average approximately $16 million per year, which the Declaration attributes largely to the Debtors' maternity services and characterizes as a service line accounting for a significant share of malpractice claims industrywide. RH's long-term self-insurance liabilities were $67.7 million at April 30, 2026, up from $42.0 million in June 2025. RH also held $72.4 million of assets limited as to use for professional liability.

Balance Sheet and Liquidity

RH's consolidated balance sheet as of April 30, 2026 shows:

• Assets — $441.2 million.
• Liabilities — $104.6 million current and $233.8 million long-term, for total liabilities of $338.4 million.
• Long-term debt — $113.1 million net of current portion ($80.8 million at the obligated group and $32.3 million outside it), plus a $5.9 million current portion ($5.5 million at the obligated group).
• Pension liability — $29.9 million.

The Declaration puts RH's total liabilities at approximately $441 million, while the balance sheet shows total liabilities of $338.4 million and total liabilities and net assets of $441.2 million.

Between the audited June 2025 balance sheet and April 30, 2026:

• RH's net assets fell to $102.8 million from $127.8 million.
• The obligated group's net assets fell to $40.9 million from $67.0 million.
• Long-term debt to capitalization rose to 59% from 53%.

RH reported $119.1 million of unrestricted cash and investments at April 30, 2026, equal to 94.6 days of cash on hand. The obligated group held $8.2 million of cash and cash equivalents and $63.2 million of investments. It was also owed $20.1 million by affiliates outside the obligated group, down from $29.2 million in June 2025.

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Events Leading to Bankruptcy

Hospital and Physician Network Losses

Over the past five years, the Hospital and its physician network have lost between $31.6 million and $48.9 million a year. Unaudited fiscal 2026 produced the largest losses at both HRHS and HRPAS.

The Debtors attribute the losses to the Hospital's location and scale, competition from larger hospital systems in the area, and a local market that has declined over the past several years. According to the Declaration, these conditions make the Hospital's future as an independent hospital unsustainable. The Declaration also states that the Hospital's strong service lines, including cardiology, cancer treatment and a significant women's health program, cannot succeed as a stand-alone facility or sustain operations for the rest of the Hospital. RH's community and post-acute services have historically covered part of the Hospital and physician network losses. According to the Debtors, they can no longer keep pace.

Fiscal 2026 Results

Through April 30, 2026, results fell well short of plan:

• Revenue — Consolidated patient service revenue trailed budget by $19.5 million.
• Expenses — Supplies expense was $52.0 million against $40.2 million budgeted, and insurance expense was $24.8 million against $7.6 million budgeted.
• Healthcare operations — The Hospital lost $18.6 million at the operating line against a budgeted $1.3 million operating gain. Healthcare operations as a whole lost $37.1 million, against a budgeted loss of $18.8 million.
• Consolidated result — RH's consolidated operating loss was $34.6 million, against a budgeted loss of $17.1 million and a loss of $27.2 million in the same period a year earlier. The obligated group lost $34.4 million at the operating line against a budgeted loss of $16.7 million.

Restructuring Efforts

The Company has struggled for several years to meet its expenses and service its debts. Over that period, the RH Board of Trustees worked with several professionals and financial advisors to find a path to financial stability. The Debtors retained Ankura Capital Advisors, LLC ("Ankura") as financial advisor to help evaluate and develop strategic alternatives. Ankura remains engaged to prepare cash flow forecasts, monitor liquidity and help develop go-forward business plans.

The Company also ran very leanly. It cut administrative teams and positions and transferred viable nursing and other programs to other operators so it could focus its remaining resources on sustaining operations. The Declaration states that this leanness impaired the Debtors' ability to manage all aspects of their operations and forced heavy reliance on outside professionals.

Citing market conditions and trends in the acute and post-acute industries, the Board determined that divesting the acute care operations gives the Company its best opportunity to sustain its life care operations in line with its mission. According to the Debtors, market conditions for senior and home care services have trended favorably over the past several years. However, RH's services in those areas run at thin margins and will need investment and marketing to grow their market share.

Bond Default and Liquidity Crisis

The Company eventually became unable to service the Bond Debt on time. The Debtors lacked the liquidity to make the bond payment due in September 2026, and HRHS and HRPAS defaulted on their obligations to service the Bond Debt.

Until recently, the Debtors had been largely current with vendors and service providers, apart from some past-due balances owed for certain utility services, to landlords and to other unsecured creditors. Liquidity constraints then delayed vendor payments and pushed outstanding balances higher, and the Debtors could not pay trade debt when due. The Declaration describes the resulting unsecured debt, on top of the Bond Debt, as an unsustainable burden. According to the Declaration, several key members of the Debtors' operations resigned over the two months before the filing as the Debtors' financial condition continued to deteriorate.

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Chapter 11 Filing

On November 1, 2026 (the "Petition Date"), the Debtors filed Chapter 11 in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania. Through the cases, the Company intends to:

• resolve the debt accumulated in its acute care operations
• sell, or close where they cannot be sold, operations that are not sustainable
• put its sustainable operations on a stable financial footing

Hospital and Physician Network

The RH Board of Trustees has determined that continuing to operate the Hospital is not sustainable and has decided to sell and/or close it in accordance with Pennsylvania law. The Debtors are exploring options to transition the Hospital and physician network to a buyer. At the same time, they are developing a wind-down plan for the Hospital and its service lines in case a going-concern sale is not possible. The Company is working with its advisors to maximize the value of those assets for creditors and for the Company's continuing operations.

In anticipation of a possible sale of the acute care operations, which largely involve HRHS, the Debtors began separating payroll and accounts payable before the filing. Each entity will run its own systems instead of relying on HRHS's consolidated services, and this work with ADP and other vendors is ongoing.

The Declaration describes HRH Management and its subsidiaries as financially stable. Because several of HRH Management's properties are close to the acute care operations, some of them may become available for sale, depending on what prospective purchasers of the acute care operations want. Such a sale would be subject to any restrictions in HRH Management's liquidity and asset guarantees under the Project Loan Agreement among:

• the Pennsylvania Housing Financing Agency, as government lender
• US Bank Trust Company, as fiscal agent
• Redeemer Village Housing, LLC, as borrower

Post-Acute and Life Care

The Debtors intend to keep their senior care and life care services, invest in their post-acute operations, and reorganize the post-acute and life care entities so they come out of Chapter 11 financially stable and keep operating. Many of the entities in this line remain financially stable and are not Debtors.

Funding and Cash Collateral

The Debtors will fund the cases with their board-designated endowment, operating revenues and cash collateral. According to the Debtors, HRHS and HRPAS would face an imminent shutdown and liquidation without immediate access to cash collateral. The cash collateral motion asks for interim and final orders:

• Bondholder collateral — HRHS and HRPAS seek to use the bondholders' cash collateral. Subject to an expense surcharge, and to the extent of any decline in the value of their collateral, the bondholders would receive replacement liens on all pre- and postpetition collateral of HRHS and HRPAS of the same type as their prepetition collateral. They would also receive a superpriority claim and an interest in additional bond collateral. According to the Debtors, preliminary valuations show that the additional collateral is worth vastly more than any expected decline in the bondholders' interest in their prepetition collateral.
• Pharm Companies collateral — HRHS separately seeks to use the Pharm Companies' cash collateral. The Pharm Companies would receive replacement liens on the same basis.
• Negotiation status — Use of cash collateral remains subject to ongoing negotiations with UMB Bank as master trustee. The Debtors have spoken with in-house counsel for the Pharm Companies and intend to reach agreement before the initial hearing. The motion seeks an expedited hearing and the scheduling of a final hearing.

Advisors

The Debtors have applied to retain:

• Dilworth Paxson LLP, as bankruptcy counsel
• Stradley Ronon Stevens & Young, LLP, as special counsel
• Epiq Corporate Restructuring, LLC, as claims and noticing agent and administrative advisor

Ankura and SSG Capital Advisors are also among the Debtors' advisors.

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First Day Motions

• Cash management — The Debtors seek to keep their centralized cash management system of 42 active bank accounts at Bank of America, TD Bank, Wells Fargo, U.S. Bank and Fulton Bank. Through its concentration and payroll accounts, HRHS handles payroll and payables for all the Debtors and most non-Debtor affiliates; each entity deposits its own funds, and HRHS tracks intercompany obligations so each entity bears its own costs, including its share of insurance premiums. The motion also asks to waive U.S. Trustee requirements to close existing accounts and pay only by check, to waive section 345(b) bonding requirements, to keep using existing business forms, and to pay prepetition bank fees to the extent of valid setoff claims.
• Wages — Authority, but not a requirement, to pay approximately $8.4 million of unpaid prepetition wages and compensation, approximately $650,000 of deductions and payroll taxes, and approximately $4.6 million of employee benefits, including 403(b), 457(b) and 457(f) plans and a defined benefit pension plan. The motion also covers approximately $15,000 of submitted and $10,000 of accrued but unsubmitted reimbursable expenses, independent contractor physician compensation and workers' compensation obligations. The Debtors do not believe any employee or independent contractor is owed more than the $17,150 statutory cap.
• Key employee retention — Approval of a retention plan for 29 non-insider employees in three tiers (system-wide operations; clinical service lines and corporate support; administrative support), with administrative expense priority for payments under the plan.
• Utilities — A $305,500 adequate assurance deposit, equal to half of the Debtors' average monthly utility usage over the past 12 months, held in a segregated account until the court orders it returned or a Chapter 11 plan takes effect. A provider that does not request more assurance within 21 days of service of the motion would be deemed to accept. A request would start a 20-day negotiation period, followed by a court hearing if the parties cannot resolve it.
• Insurance — Authority to continue approximately 27 insurance policies covering general liability, directors and officers liability, workers' compensation, property, flood and crime, among other risks; the Debtors obtain brokerage services from Willis Towers Watson, Inc. The motion also covers 12 surety bonds, related prepetition obligations including broker fees, and honoring and renewing premium financing agreements. As of the Petition Date, the Debtors are current on payments to their insurers, premium financing companies and surety bonds, and they self-insure for additional needs.