CareMax Plans Potential Layoffs Amid Bankruptcy Restructuring and Pending Sales

CareMax, currently navigating Chapter 11 bankruptcy, is preparing to potentially lay off 530 employees in the new year, as revealed in notifications filed with Florida regulators last week. However, the final decision regarding which employees—if any—will be let go hinges on the sale of CareMax's management services organization (MSO) and clinical centers business.

The company is seeking court approval to sell its MSO to Revere Medical, a private equity-backed firm, and its clinical centers to ClareMedica Health Partners. If these transactions are approved, the new buyers will have full discretion over employment decisions, including potential layoffs, with executives such as CareMax’s CEO, COO, and CMO possibly among those affected.

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Background Insight:
CareMax’s bankruptcy filing last month attributed its financial troubles to its close relationship with Steward Health Care, which filed for bankruptcy in May. As the exclusive Medicare managed services partner to Steward’s physician network, CareMax struggled with significant financial setbacks exacerbated by Steward’s declining performance, high labor costs, and reimbursement delays.

As part of its Chapter 11 restructuring, CareMax is seeking to divest its core assets. Revere Medical, the proposed buyer of its MSO business, acquired Stewardship Health from a bankruptcy auction earlier in October. Meanwhile, ClareMedica has emerged as the stalking horse bidder for the majority of CareMax’s clinics, setting the auction floor price at $100 million.

The transactions still require approval from the U.S. Bankruptcy Court for the Northern District of Texas and other regulatory bodies. CareMax’s Worker Adjustment and Retraining Notification (WARN) notice is a precautionary step, as the company is uncertain whether the sale will lead to mass layoffs or closures.

If the sales proceed, employees of CareMax’s MSO business will be notified by January 17 about their employment status, while employees at the clinical centers will be informed by January 16.

Additionally, CareMax has come under scrutiny for its ongoing association with Ralph de la Torre, the former CEO of Steward Health Care, who holds a 15% stake in CareMax and is a member of its board of directors. De la Torre is currently at the center of a federal corruption investigation related to alleged fraud overseas. Recently, federal authorities seized his phones as part of the probe. In response, Senator Edward Markey has urged CareMax and Revere Medical to sever ties with de la Torre and former Steward executives.