Case Summary: Partners Pharmacy Chapter 11

Business Description

Partners Pharmacy Services, LLC, along with its Debtor affiliates⁽¹⁾ (collectively, "Partners Pharmacy" or the "Company"), is a long-term care (LTC) pharmacy provider that serves the medication management needs of residents in skilled nursing facilities, assisted living communities, and other institutional care settings. Operating a “closed-door” pharmacy model not open to the general public, the Company delivers comprehensive, integrated pharmacy solutions through a network of pharmacies located within or dedicated to specific healthcare facilities.

• At its peak, Partners Pharmacy was the third-largest LTC pharmacy company in the U.S., serving approximately 48,000 residents across 16 states and the District of Columbia from 13 pharmacy locations.
• Following a period of contraction, the Company currently serves roughly 17,000 residents in seven states.

Partners Pharmacy’s key offerings include specialized medication packaging, routine delivery services, infusion therapies, compounding services, and the integration of electronic medication administration record (eMAR) systems. Its largest clients include CareOne Management-affiliated facilities (serving approximately 8,000 residents) and various State of New Jersey healthcare facilities.

Partners Pharmacy Services, LLC and 13 affiliates filed for Chapter 11 protection on August 13, 2025 (the "Petition Date"), in the U.S. Bankruptcy Court for the Southern District of Texas, reporting $1 million to $10 million in assets and $10 million to $50 million in liabilities.

⁽¹⁾ For a complete list of debtor entities, see the organizational structure chart below.

Corporate History

Partners Pharmacy was founded in 1998 in New Jersey as Partners Healthcare, L.L.C. The Company originated as a family-owned business and continues to maintain strong ties to the family of Daniel E. Straus, a healthcare entrepreneur and founder of CareOne, a leading senior care operator in the Northeast.

• Through holding companies, Mr. Straus indirectly owns all equity in the Debtors, as well as CareOne and the Debtors’ pre-petition lender, CS One. This ownership structure created a close relationship in which CareOne-affiliated nursing facilities became the Company’s largest group of customers.

National Expansion and Financing

• Over the past two decades, Partners Pharmacy expanded its long-term care pharmacy services into a multi-state footprint through a mix of organic growth and targeted acquisitions. Notable milestones include:
  • October 2015: Acquisition of Tech Pharmacy Services LLC (dba Advanced Pharmacy), a Houston-based provider of remote pharmacy services and automated dispensing technology.
  • March 2018: Acquisition of the onsite pharmacy serving Presbyterian Village North, a continuing care retirement community in Dallas, further expanding Partners Pharmacy’s operations in Texas. After this deal, the Company reported serving 6,000+ residents across 50+ Texas communities from three pharmacy locations.

Pivotal New Jersey State Contract

• In 2014, Partners Pharmacy was awarded a contract to operate on-site pharmacies for New Jersey’s state-run facilities, including veterans’ homes and developmental centers.
• Fulfilling this contract required significant investment in the Company’s central pharmacy hub in Springfield, NJ. Notably, during the most recent rebid cycle, no other pharmacy companies submitted competing bids, underscoring the difficulty of replicating the Company's in-house capabilities at scale.

Corporate Organizational Structure

Operations Overview

Partners Pharmacy’s operational model is centered on providing specialized, high-touch pharmacy dispensing and medication management services tailored to the long-term care environment. Its services are deeply embedded in its clients’ daily care routines, making the Company a critical and not easily replaceable partner.

Service Model and Facilities

• The Company offers prescription fulfillment (often in specialized unit-dose or multi-dose packaging), routine medication delivery, infusion therapy, compounding services, and clinical support, including medication regimen reviews and staff training.
• Operations are run from a few regional, "closed-door" pharmacy hubs, with the largest facility located in Springfield Township, NJ, which supports the New Jersey state contract. Other active pharmacies are located in states including Connecticut, Massachusetts, and Texas.
• Many pharmacies are strategically located near or within client facilities to enable rapid delivery and on-site pharmacist access, increasing the stickiness of its service offerings.

Key Customers and Payors

• The Company’s business is concentrated with a few key customers:
  • CareOne-Affiliated Facilities: The largest customer group, representing approximately 8,000 residents served.
  • State of New Jersey: A cornerstone contract covering ten state-operated facilities.
• Beyond these anchor clients, Partners Pharmacy serves numerous independent skilled nursing and assisted living facilities. A significant portion of residents' medications are paid for by Medicare Part D and Medicaid, making the Company highly sensitive to public healthcare reimbursement policies.

Supply Chain and Key Creditors

• Partners Pharmacy sources approximately 95% of its pharmaceuticals from its primary supplier, Cardinal Health, under a 2019 Prime Vendor Agreement.
• As the Company’s financial condition deteriorated, its relationship with Cardinal Health became strained:
  • By November 2022, Partners Pharmacy owed Cardinal Health approximately $29 million for unpaid invoices.
  • In response, Cardinal tightened credit terms to cash-on-delivery (COD) for all new orders and began withholding monthly rebates to offset the outstanding balance, severely straining the Company's daily cash flow.
  • As of the Petition Date, the outstanding balance to Cardinal was approximately $20.4 million, secured by a junior lien on substantially all of the Company's assets.

Workforce

• At its operational peak, Partners Pharmacy employed approximately 800 people. Following multiple rounds of workforce reductions amid declining business volume, the Company now employs about 284 staff, of whom approximately 239 are full-time.
• The workforce includes licensed pharmacists, pharmacy technicians, nurses, drivers, and administrative personnel responsible for billing, customer service, and IT support.

Prepetition Obligations

Top Unsecured Claims

Events Leading to Bankruptcy