Wellpath, a behavioral health enterprise with $425 million in revenue, is currently on the market and potentially at a discount to typical market rates. The company is seeking the sale of its behavioral health division, known as Recovery Services, in hopes of netting at least more than $375 million.
Based in Nashville, Tennessee, Wellpath is one of the nation’s largest providers of prison-based and outsourced behavioral health care. The company filed for bankruptcy on Nov. 11, citing challenges in balancing its growth, leverage, and the ever-evolving landscape of the health care industry.
Ben Slocum, the CEO of Wellpath, stated in a news release that the decision to pursue a court-supervised process for the sale of the Recovery Solutions division was made to strengthen the company’s financial foundation and ensure the continuity of essential services to vulnerable populations.
Despite previous attempts to sell the division throughout much of 2024, Wellpath was unsuccessful in finding a suitable buyer. The company has a significant loan debt coming due totaling $644 million by October 2025, prompting the need for a restructuring of its financial obligations.
The restructuring support agreement includes an accelerated bid process for the sale of the Recovery Services division, with a deadline for bids set for Dec. 13. An auction is scheduled for Dec. 16, with a sale hearing before the judge over the case set for Dec. 23. The agreement also includes an unnamed stalking horse bid from Wellpath’s creditors totaling $375 million, acting as a minimum bid for potential buyers.
The Recovery Solutions division of Wellpath employs 3,700 clinical staff and serves about 3,000 patients in 70 facilities across 10 states. It offers services in various settings, including prisons, jails, state hospitals, and community-based facilities.
Wellpath attributes its financial struggles to escalating operating and labor costs, rising professional liability expenses, and underperforming contracts. Despite steady revenue growth in previous years, challenges such as increased medical supply costs due to COVID-19 and spikes in professional liability insurance expenses have contributed to the company’s current financial situation.
As Wellpath navigates the bankruptcy process and seeks a buyer for its Recovery Solutions division, the company remains committed to providing essential services to those in need. The outcome of the sale will have a significant impact on the future of Wellpath and the individuals it serves in the behavioral health care sector.
