Officials at MedAvant Healthcare Solutions have received approval from a bankruptcy court to sell the struggling provider of healthcare technology and transaction services for $24.35 million.
That was the high bid submitted during Monday's auction by an affiliate of Marlin Equity, an El Segundo, Calif.-based private equity firm that had been identified as a "stalking horse" purchaser in the days leading up to the auction. The sale is scheduled to be completed on Sept. 22.
The auction was formerly approved Tuesday by Judge Brendan Shannon. The judge of the Delaware-based U.S. Bankruptcy Court, who has been overseeing the case since MedAvant filed for Chapter 11 bankruptcy protection on July 23, said he was "very impressed" with the auction's results.
So were MedAvant officials, who saw the auction as an opportunity to re-energize the Atlanta-based company.
"The spirited bidding for the company ... confirms our long-held view that MedAvant has been and remains a valuable player in this market," said Peter Fleming, the company's interim chief executive officer, in a press release. "We are especially pleased that the auction process went so well. This gives us the opportunity to continue the business substantially as before. We look forward to this new chapter in our history and to the benefits of the sale for our entire team. MedAvant will emerge from this reorganization as a much healthier and stronger company with a dramatically improved balance sheet."
Following its bankruptcy declaration, the company won court approval on August 19 for the payment of wages, the continuation of benefit and rebate programs and payment of certain vendors to keep operations going during the Chapter 11 process.
In May, MedAvant - a trade name of ProxyMed - 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.
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.
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.
Will MedAvant sink or swim? Are its problems indicative of the industry as a whole or specific to the company? Send your comments to Managing Editor Eric Wicklund at eric.wicklund@medtechpublishing.com.