Faced with sagging stock prices and running out of assets to sell off, MedAvant Healthcare Solutions has filed for Chapter 11 bankruptcy protection.
The Atlanta-based provider of healthcare technology and transaction services has filed a motion to sell its assets to Marlin Equity, an El Segundo, Calif.-based private equity firm, subject to higher and better bids at an auction sale expected to be conducted in 8-10 weeks. In addition, the company has received a debtor-in-possession financing commitment of $8.1 million from Laurus Master Fund, Ltd., its senior lender, of which $2.9 million is new financing designed to support the company during its Chapter 11 case.
"During the past year we have divested our non-core business lines in order to focus on our electronic data interchange business with the goal of improving our operating efficiencies," said Peter Fleming, the company's interim CEO, in a press release. "Our objective now is to align our financial structure with our new business structure and bring in a partner to invest capital toward the growth of our company. We believe this financial assistance will enable us to move through the process as quickly as possible so we may resume our focus on building a new, stronger company."
Just one day earlier, company officials had received a notice of non-compliance from Nasdaq Stock Market after the company's stock failed to maintain a minimum bid price of $1 per share for 30 consecutive trading days. And in April, Nasdaq officials had warned the company for not maintaining a minimum value of publicly held shares of $15 million required for continued listing on the stock market.
This past May, MedAvant, a trade name of ProxyMed, Inc. sold its laboratory services business, including its patented Pilot technology that enables remote delivery of lab results to providers, to ETSec of Mount Laurel, N.J. for an undisclosed sum of money. In February, the company closed the sale of its national preferred provider network (NPPN) to Coalition America, Inc. for approximately $23.5 million in cash. And on April 30, 2007, the company sold its pharmacy processing business to SureScripts in June 2007 for $400,000 in cash.
The company's turmoil has extended to the executive suite as well. Fleming was appointed interim CEO on Feb. 28, while Lonnie Hardin was promoted to president and COO at the same time in the wake of the resignation of John Lettko as CEO and director. In April, Mark Simcoe was appointed interim chief financial officer following the resignation of Gerard M. Hayden, Jr., who had accepted the same position at HealthStream, Inc.
Also in April, the company was issued a going concern qualification from UHY LLP, an independent registered public accounting firm, whose audit opinion was based on declining revenues, recurring losses from operations and limitations on the company's access to capital.
In May, the company announced that first quarter net revenues had fallen to $8.5 million, compared to $9.5 million for the same quarter last year and $12.8 million for the previous quarter. First quarter operating losses were set at $1.1 million, compared to $900,000 in the fourth quarter of 2007, and net loss was set at $5.4 million, compared to $5.3 million for the previous quarter. Overall, the company lost $36.8 billion in 2007 as revenues dropped 17 percent.
ProxyMed announced the name change to MedAvant in late 2005. At the time, company officials said they wanted to focus on leveraging the burgeoning interest in real-time transactions for its core market - physician offices.
Is this an example of a bad economy pulling a good company down or a bad company finally going under? E-mail your comments to Managing Editor Eric Wicklund at eric.wicklund@medtechpublishing.com.