Wellpath’s Recovery Services Division to Become Independent Following Asset Acquisition
Wellpath, a prison-based and outsourced behavioral health care service provider, is in the process of making its Recovery Services division independent from the rest of its operations. The division’s behavioral health assets will be acquired by Wellpath’s lender group as part of a $395 million credit bid, along with an additional $14.25 million to help establish the division as an independent enterprise.
Despite a marketing and bid process, no qualifying bids for the Recovery Services division emerged. The final sales documents have not been made public as of yet. Bankruptcy Judge Alfredo Perez approved the sale based on the evidence presented during court proceedings.
With this deal, Wellpath will erase $395 million of its debt to creditors, significantly reducing its loan debt of $644 million due by October 2025. The original stalking horse bid for the division was valued at $375 million.
The Recovery Services division currently consists of 3,700 clinical staff members providing care for approximately 3,000 patients in 70 facilities across 10 states. Services offered include treatment in prisons, jails, state hospitals, forensic treatment centers, civil commitment centers, and community-based facilities such as the NeuroBehavioral Hospitals in Florida and the Alpine Special Treatment Center and Harborview Center facilities in California.
This is the second time that the investment and operator markets have shown disinterest in acquiring the Wellpath Recovery Services division. Prior to filing for bankruptcy in November, the company attempted to sell the division to address its impending debt obligations. Despite 70 potential buyers signing confidentiality agreements to review the company’s information, no viable bids were received.
