The healthcare sector has faced economic challenges this year that have included increased insurance liability premiums, a decline in reimbursement rates and ongoing Medicaid reductions, rising labor, product, and operating costs, and rising interest rates.
While 21% fewer healthcare companies filed for Chapter 11 bankruptcy in 2025 than in 2024, according to Gibbins Advisors’ 2025 Healthcare Bankruptcy Report, major healthcare companies continue to file petitions in 2026.
GoHealth Inc., a leading health insurance marketplace and Medicare-focused digital health company, filed for a prepackaged Chapter 11 bankruptcy to restructure its debt, reinstate general unsecured claims and preferred equity interests and hand control of the company to its prepetition lenders.
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GoHealth files prepackaged bankruptcy
The Chicago-based debtor and seven affiliates filed their petition on June 7 in the U.S. Bankruptcy Court for the District of Delaware listing about $917 million in assets and $986 million in debts, according to court papers from bankruptcy administration firm Donlin Recano.
GoHealth’s largest unsecured creditors include Bankers Life Agency Inc., owed $11 million; Together Health, owed over $6.7 million; One Digital Medicare Services, owed over $4.5 million; Senior Protect Solutions, owed $1.6 million, Health Insurance Associates, owed over $1.07 million; and Exact Care, owed $1 million.
The 25-year-old healthcare insurance broker began as a provider of lead management software and certain digital services to independent health brokers, according to court papers.
The company transitioned from software and digital services to independent insurance brokers and built a direct-to-consumer, in-house health insurance marketplace, which accelerated with the passage of the Affordable Care Act in 2010.
The company’s success led to raising over $900 million in its 2020 initial public offering with an initial valuation of $6.6 billion.
Company’s success led to challenges
“Unfortunately, GoHealth’s very success is what led to its challenges,” Chief Executive Officer Vijay Kotte wrote in a Chapter 11 declaration on June 7.
GoHealth’s ability to service a high debt burden relied on assumptions on the length of time individuals would remain on their health insurance plans, which proved to be incorrect due to unforeseen shifts in the market and consumer behavior, according to the declaration.
Debtor’s interest rate doubled
The debtor subsequently amended its credit facilities, which led to higher interest rates and stricter covenants. The company’s interest rate doubled, which significantly increased its debt service obligations.
The company addressed its financial distress by raising $50 million through a private investment in public equity facility and promoted its non-agency business, which entailed collecting fees from carriers for facilitating the acquisition of new customers and one-time upfront fees from carriers for placing new customers in health insurance policies, according to court papers.
Couldn’t sustain business performance
The business was initially successful but could not be sustained, as the rising cost of healthcare outpaced increases in government reimbursement rates. The business also suffered from effects from changes in compensation from the Centers for Medicare and Medicaid Services toward Medicare Advantage, as carriers scaled back on their non-agency business.
The reduction in non-agency business decreased demand for GoHealth’s business beginning in 2024. The U.S. Department of Justice in May 2025 filed a complaint-in-intervention under the False Claims Act and Anti-Kickback Statute against several health insurance companies, including GoHealth, which required the debtor expend financial resources to defend itself.
The debtor reached agreements with 100% of its prepetition lenders, over 99% of the holders of GoHealth Holdings LLC’s equity interests, and over 61% of the holders of the company’s Class A common stock on its prepackaged Chapter 11 plan.
“Many organizations don’t file for bankruptcy protection because conditions deteriorate overnight—they often file when liquidity runs out and options narrow. The lower filing volumes seen in 2025 may indicate that distressed healthcare organizations are taking earlier action, which would be a positive development, rather than reflecting a reduction in underlying market stress” said Gibbins Advisors Principal Clare Moylan
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