Adeptus Health

Adeptus Health was an American for-profit healthcare company based in Irving, Texas, whose principal business was the operation of freestanding emergency rooms. Its operating platform was closely associated with First Choice Emergency Room, a network founded in 2002 by Jack Novak and described as the oldest and largest freestanding emergency-room network in the United States. The model placed emergency-care facilities outside the main campus of a conventional hospital, allowing patients to receive emergency evaluation, diagnosis, and treatment in standalone locations. The company began in 2002, when its first emergency room opened in Flower Mound, a Dallas-area suburb. It expanded across Texas and later entered Arizona and Colorado. Before entering a series of health-system partnerships, Adeptus was reported to own and operate 52 First Choice Emergency Room facilities in markets including Houston, Austin, Dallas, Fort Worth, San Antonio, Denver, and Colorado Springs. In Arizona, it operated freestanding emergency rooms connected with Dignity Health's Arizona General Hospital system. Adeptus pursued growth through partnerships and co-branded facilities. In 2014 it formed a joint venture with Dignity Health to develop a hospital in Arizona. In 2015 it announced an arrangement with UCHealth to develop emergency-care facilities in the Denver metropolitan area, Colorado Springs, and northern Colorado. During 2016, it reached agreements that moved several facilities under established health-system brands: 27 First Choice locations were rebranded under Texas Health Resources, while agreements with Mount Carmel Health System and Ochsner Health System contemplated emergency rooms in Ohio and Louisiana under those systems' names. The company became publicly traded in June 2014 through an initial public offering on the New York Stock Exchange. Its rapid expansion was followed by operational and financial pressure. Securities purchasers filed a class-action lawsuit in 2016, alleging that Adeptus and other defendants made materially false or misleading statements concerning internal controls and business operations. A separate 2017 case in Colorado concerned facility fees and alleged inadequate disclosure of patient costs. Adeptus filed for bankruptcy protection in 2017, later announced a restructuring that resulted in the delisting of its Class A shares, and was acquired or brought under the control of Deerfield Management. In December 2020, the company filed for Chapter 7 bankruptcy. Most First Choice locations had closed by July 2020, and Adeptus no longer operates as an independent company.

Adeptus Health emerged from the development of freestanding emergency care in the United States. The company was founded in 2002, with its first emergency room opening in Flower Mound, Texas, in the Dallas area. Its operating business became closely linked to First Choice Emergency Room, founded by Jack Novak in the same year. First Choice offered emergency assessment and treatment in standalone facilities rather than in emergency departments located on the principal campus of a full-service hospital. The freestanding model enabled Adeptus to place emergency facilities in retail and community locations outside traditional hospital campuses. The company expanded across Texas and subsequently entered Arizona and Colorado. Before many facilities were transferred to health-system brands, Adeptus was reported to operate 52 First Choice Emergency Room locations in Houston, Austin, Dallas, Fort Worth, San Antonio, Denver, and Colorado Springs. In Arizona, it operated 10 freestanding emergency rooms co-branded with Dignity Health's Arizona General Hospital as of March 2017. Growth was supported by outside investment, public-market access, and partnerships with hospital systems. First Choice was recognized by Inc. magazine as a fast-growing business in 2010, 2011, and 2012. In 2012, Sterling Partners invested in the business. Adeptus later became a public company in June 2014, listing on the New York Stock Exchange under the symbol ADPT after an offering of 4.9 million shares at $22 per share. That year, it also formed a joint venture with Dignity Health to develop a hospital in Arizona. The partnership strategy broadened in 2015 and 2016. Adeptus announced a relationship with UCHealth to develop emergency-care facilities in the Denver region, Colorado Springs, and northern Colorado. In May 2016, it agreed with Texas Health Resources to rebrand 27 First Choice Emergency Rooms, including the Dallas–Fort Worth network, under Texas Health branding. In August 2016, it announced plans with Mount Carmel Health System for emergency rooms in Ohio, and in September 2016 it announced a comparable arrangement with Ochsner Health System for facilities in Louisiana. The expansion period was followed by legal and financial stress. A securities class action filed in 2016 alleged that Adeptus, certain directors, Sterling Partners, and underwriters associated with a secondary offering violated federal securities laws by making misleading statements or failing to disclose weaknesses in internal financial controls and the condition of the business. A separate Colorado lawsuit filed in 2017 challenged facility-fee practices and alleged that patients were not adequately informed about the costs of care. In 2020, a court approved a $44 million settlement resolving the securities case for the relevant investor class. Adeptus filed for bankruptcy protection in 2017. Its restructuring included the delisting of its Class A shares, and Deerfield Management subsequently acquired control after the bankruptcy process. The First Choice network later contracted substantially; by July 2020, most locations had closed. In December 2020, Adeptus filed for Chapter 7 bankruptcy. The company is therefore treated as defunct rather than as an active healthcare operator. Its history illustrates both the expansion of freestanding emergency care and the risks associated with rapid facility growth, complex health-system partnerships, public-market financing, and patient-pricing controversy.

1. 2020Securities settlement and Chapter 7 filing

   A court approved a $44 million securities settlement, and Adeptus filed for Chapter 7 bankruptcy in December.

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2. 2017Bankruptcy and restructuring

   Adeptus filed for bankruptcy, later announced a restructuring and delisting, and came under the control of Deerfield Management.

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3. 2016Health-system rebranding and expansion agreements

   Adeptus reached agreements with Texas Health Resources, Mount Carmel Health System, and Ochsner Health System involving rebranding or development of emergency facilities.

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4. 2015UCHealth development partnership

   Adeptus and UCHealth announced plans to develop emergency-care facilities across Colorado.

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5. 2014Initial public offering

   Adeptus Health completed its initial public offering on the New York Stock Exchange and began trading under ADPT.

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6. 2014Arizona hospital joint venture

   Adeptus created a joint venture with Dignity Health to develop a hospital in Arizona.

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7. 2012Sterling Partners invests in First Choice

   Sterling Partners invested in First Choice Emergency Room during its rapid-growth period.

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8. 2002Adeptus and First Choice begin operations

   Adeptus Health was founded and its first emergency room opened in Flower Mound, Texas. The related First Choice Emergency Room business was founded by Jack Novak.

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Operator and developer of freestanding emergency-care facilities, using standalone locations and partnerships with established health systems to expand access to emergency services.

• First Choice Emergency RoomFreestanding emergency-care network2002

  First Choice Emergency Room was Adeptus Health's principal operating name for standalone emergency facilities, particularly in Texas and Colorado. The network provided emergency evaluation, diagnosis, and treatment outside the main campus of a traditional hospital. It expanded rapidly before many facilities were rebranded through partnerships with health systems, and most locations had closed by July 2020.

• Dignity Health Arizona General Hospital facilitiesHospital and emergency-care venture2014

  Adeptus partnered with Dignity Health on an Arizona hospital venture and operated freestanding emergency rooms co-branded with the Arizona General Hospital system. The arrangement represented an effort to connect Adeptus's standalone emergency-care model with a broader hospital network.

• Texas Health-branded emergency facilitiesCo-branded emergency-care facilities2016

  Under a 2016 agreement with Texas Health Resources, 27 First Choice Emergency Rooms, including the Dallas–Fort Worth facilities, were rebranded under the Texas Health name. The arrangement shifted the public-facing identity of a substantial portion of Adeptus's Texas network toward a hospital-system brand.

• 2017Undertake bankruptcy restructuringStrategy

  Rapid expansion was followed by financial and operational pressure, litigation, and weakening public-market confidence.

  What changed. Adeptus filed for bankruptcy protection and later announced a restructuring that included delisting its Class A shares.

  Aftermath. Deerfield Management acquired control after the bankruptcy process, but Adeptus ultimately filed for Chapter 7 bankruptcy in December 2020.

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• 2016Shift facilities toward health-system brandsStrategy

  Adeptus sought to expand its reach while associating standalone emergency facilities with established regional healthcare systems.

  What changed. It agreed to rebrand 27 First Choice locations under Texas Health and entered development agreements with Mount Carmel and Ochsner for facilities in Ohio and Louisiana.

  Aftermath. The agreements reduced the prominence of the First Choice name in some markets, while the company subsequently entered bankruptcy and its network later contracted substantially.

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• 2014Pursue public-market expansionStrategy

  Adeptus was expanding its freestanding emergency-room network and required capital to support additional facilities and related hospital ventures.

  What changed. The company completed a New York Stock Exchange initial public offering in June 2014.

  Aftermath. Adeptus gained public-company access to capital but later faced investor litigation, financial distress, and delisting during its 2017 restructuring.

  IPO shares and offer price. 4.9 million shares offered at $22 per share (June 2014)

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• 2017Patient facility-fee lawsuitControversy

  A Colorado plaintiff sued Adeptus and sought class-action status, alleging that the company benefited from consumer confusion and did not adequately disclose the high facility fees associated with treatment at its emergency facilities.

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• 2016Securities disclosure class actionControversy

  Investors alleged that Adeptus Health and other defendants violated federal securities laws by making false or misleading statements and by failing to disclose weaknesses in internal financial reporting controls and the condition of the company's operations. The case was brought on behalf of purchasers of Adeptus Class A common stock during the relevant public-company period.

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• 2020Adeptus files for Chapter 7 bankruptcy

  Adeptus filed for Chapter 7 bankruptcy, further marking the end of the company's operation as an independent healthcare business.

  Bankruptcy
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• 2017Adeptus files for bankruptcy protection

  Adeptus entered bankruptcy proceedings amid financial and operational difficulties.

  Bankruptcy
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• 2017Adeptus announces restructuring and share delisting

  The company announced a financial restructuring that included delisting its Class A shares from the New York Stock Exchange.

  Bankruptcy
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• 2017Deerfield Management acquires control after bankruptcy

  Following the bankruptcy process, healthcare-focused hedge fund Deerfield Management acquired control of Adeptus Health.

  M&ABankruptcy
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• 2016Texas First Choice facilities move under Texas Health branding

  Adeptus agreed with Texas Health Resources to rebrand 27 First Choice Emergency Rooms, including the Dallas–Fort Worth facilities, under the Texas Health name.

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• 2016Adeptus reaches emergency-room agreement with Mount Carmel

  The company agreed with Mount Carmel Health System to build and operate emergency rooms in Ohio under the Mount Carmel brand.

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• 2016Adeptus reaches emergency-room agreement with Ochsner

  Adeptus announced an agreement with Ochsner Health System to develop and operate emergency rooms in Louisiana under the Ochsner name.

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• 2015Adeptus partners with UCHealth on Colorado emergency-care expansion

  Adeptus announced plans with UCHealth to develop emergency-care facilities in Denver, Colorado Springs, and northern Colorado, involving existing and planned First Choice locations.

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• 2014Adeptus Health completes initial public offering

  Adeptus Health became a public company through a New York Stock Exchange offering of 4.9 million shares priced at $22 per share.

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• 2014Adeptus forms hospital joint venture with Dignity Health

  The company created a joint venture with Dignity Health to develop a hospital in Arizona.

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1. Adeptus Health