Primary care company Carbon Health filed for Chapter 11 bankruptcy relief in Texas. 

The company, which offers both in-person care at nearly 100 clinics and virtual care services, said Monday it reached a restructuring agreement with its existing lenders that establishes a "clear path to recapitalization and new ownership."

Carbon Health intends to pursue a dual-track, court-supervised process that allows it to enter a Chapter 11 plan premised on a debt-for-equity exchange, and a post-petition marketing and sale process for all or a portion of its assets, the company said in a press release issued Monday.

"This structure is intended to maximize value while preserving flexibility as the process moves forward," Carbon Health executives said.

To implement the restructuring, Carbon Health and certain affiliates have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas.

"The decisive actions we are taking today will strengthen our financial foundation and better position Carbon Health to advance our mission of making high-quality healthcare accessible to everyone," said Kerem Ozkay, Carbon Health CEO, in a statement. "We appreciate the strong support from our lenders, which will enable us to move through this process efficiently and with minimal disruption to our patients, partners and employees."

In a bankruptcy filing, Carbon Health listed estimated assets and liabilities between $100 million and $500 million. The company said it had more than 100,000 creditors.

Future Solutions Investments committed to provide up to $19.5 million in debtor-in-possession financing to support Carbon Health's operations throughout the restructuring and sale process, including payments to employees, providers and suppliers, as well as the continued delivery of patient care.

Founded in 2015, the San Francisco-based company combines brick-and-mortar clinics with virtual services and operates 96 clinics in 7 states, according to its website. The company experienced a major growth surge during the COVID-19 pandemic, raising $128 million in 2020, followed by a big-ticket $350 million series D funding round in July 2021, hitting a $3.3 billion valuation.

Driven by pandemic growth, Carbon Health executives said in 2021 that the company had a goal line of 1,500 clinics by 2025 “to become the largest primary care provider in the U.S.”

That year, the company was on a growth spree with several acquisitions including virtual diabetes management startup Steady Health and Alertive Healthcare, a remote patient monitoring company.

In 2023, CVS Health Ventures backed a $100 million investment in Carbon Health to fuel its expansion. At the time, the company operated more than 125 brick-and-mortar clinics in 13 states, along with virtual care services. The company said it provided care for more than a million patients across the U.S.

Carbon Health has raised more than $600 million across multiple funding rounds.

Post-pandemic, however, demand shifted and capital markets for healthcare companies tightened, executives noted in the press release. "The company faced increased pressure on its balance sheet. In response, Carbon Health implemented a range of debt-reduction and cost initiatives," executives said.

In June 2022, the company cut 8% of its global workforce and eight months later, in January 2023, it reduced its head count again by more than 200 employees and announced corporate restructuring plans. At that time, it also shuttered major initiatives, including public health, remote patient monitoring, hardware and chronic care programs, to focus on its "core primary care and urgent care service."

"Over the past year, we've made meaningful progress by focusing our footprint, simplifying operations, and strengthening financial discipline. By using the Chapter 11 process to implement a transaction that will right-size our capital structure, we expect to emerge as a more resilient organization with the flexibility needed to support sustainable growth and continue delivering best-in-class care," Ozkay said in a statement.

Operations will continue without interruption during the restructuring process, executives asserted.

"It will be business as usual while we complete the restructuring and sale. Patients should experience no disruption to their care. We will continue providing urgent and primary care to new and existing patients in our clinics and through virtual visits when appropriate. Patients will also retain full access to their medical records, and their health information will remain secure," Ozkay said.

Carbon Health has retained Alvarez & Marsal as financial advisor and Pachulski Stang Ziehl & Jones LLP as bankruptcy counsel.