Petersen Health Care Declares Bankruptcy After Ransomware Attacks

Petersen Health Care, recognized as a leading operator of nursing homes in the United States, has filed for bankruptcy protection following a series of cyberattacks and defaults on government-backed loans. Headquartered in Peoria, Illinois, the company includes an expansive network comprising over 90 nursing homes spread across the states of Illinois, Missouri, and Iowa. Amid mounting financial pressures, Petersen Health Care initiated Chapter 11 proceedings in a Delaware bankruptcy court on Wednesday, confronting debts exceeding $295 million. A large portion of this debt, amounting to $45 million, pertains to healthcare facility loans insured by the U.S. Department of Housing and Urban Development, highlighting the severity of the company’s financial predicament.  

The decision to seek bankruptcy protection marks the culmination of a series of challenges that were made worse by cyber attacks. In October 2023, Petersen Health Care was hit by a ransomware attack orchestrated by the Cactus ransomware group. This attack inflicted severe damage, leading to the loss of important business records  necessary for timely billing of customers and insurers. The company consequently experienced major delays in receiving reimbursements for the services it provided, deepening its already poor financial state. Adding to these challenges, Petersen Health Care was targeted by another ransomware attack in February 2024, this time affecting Change Healthcare, a key partner for the company. Attributed to the Blackcat ransomware group, this assault caused widespread disruptions across healthcare providers nationwide, disrupting payments to entities like Petersen Health Care and exacerbating its financial challenges. The adverse effects of these cyber attacks were further worsened by Petersen Health Care’s inability to meet its repayment obligations on its HUD-insured loans. In response, lenders took decisive action, placing 19 of the company’s locations into receivership. This development severely impacted Petersen Health Care’s operations, exacerbating its existing challenges and complicating its financial situation even further.  

However, despite these formidable setbacks, Petersen Health Care remains commited to delivering quality care to its residents. Chief Restructuring Officer David Campbell expressed optimism regarding the company’s prospects, stating “We will emerge from restructuring as a stronger company with a more flexible capital structure. This will enable us to continue as a first-choice care provider and a reliable employer for our staff.” To manage the bankruptcy proceedings, Petersen Health Care has secured a $45 million loan to cover operational expenses. The company intends to leverage this funding to address immediate financial obligations while concurrently pursuing debt restructuring initiatives aimed at developing a more sustainable future. Stakeholders have been advised to closely monitor developments in the hope that Petersen Health Care can successfully manage its financial hurdles and uphold its mission of providing important care to elderly and disabled individuals throughout the Midwest. The collective focus remains on ensuring continuity in delivering key healthcare services while working towards financial stability and resilience.