LifeScan Global Corporation, a leading maker of blood glucose monitoring devices, has filed for bankruptcy protection in Texas with a plan to eliminate approximately $1.4 billion in liabilities as it struggles with the industry-wide shift toward newer glucose monitoring technologies. The diabetes management company's Chapter 11 filing on July 15 in the Southern District of Texas comes with strong creditor support, with approximately 97% of secured lenders backing the proposed restructuring.
The Malvern, Pennsylvania-based company, which was acquired from Johnson & Johnson by private equity firm Platinum Equity in 2018 for approximately $2.1 billion, cited the growing adoption of continuous glucose monitoring (CGM) products as the primary driver of its financial distress. The company currently has approximately $922 million in funded debt and another $1.03 billion in rebate obligations to pharmacy benefit managers and other healthcare payers.
"LifeScan's financial position has deteriorated in the past few years due to significant changes in the diabetes management market, predominantly driven by the growing adoption of CGM products, stemming from the 2017 launch of Abbott's FreeStyle system," the company stated in its disclosure statement. "LifeScan ended 2023 with approximately $750 million in revenue—a marked decline from previous years."
The company's blood glucose monitoring (BGM) business has faced increasing competition from continuous glucose monitoring technology, which provides users with a real-time stream of glucose data without requiring finger pricks. LifeScan's OneTouch brand of glucose meters has been a market leader for decades, but the company has not yet entered the CGM market despite working with a strategic partner on developing such products.
Under the proposed restructuring plan, which is supported by a revised restructuring support agreement (RSA) signed by nearly all first and second lien lenders, LifeScan will eliminate approximately $1.4 billion in debt. Holders of first lien term loan claims totaling about $365 million will receive excess cash and new first lien term loans, with the option to convert a portion to equity. Second lien claim holders with approximately $311 million in claims will receive 95% of the reorganized company's equity.
General unsecured creditors, with claims estimated at $981 million, will receive their pro rata share of a designated pool of funds. Existing equity interests held by Platinum Equity will be cancelled with no recovery.
"After more than ten months of extensive stakeholder negotiations, the time has come to execute the restructuring and position LifeScan for its next chapter of growth," the company said in its filing. LifeScan has dual-tracked its restructuring process, planning to simultaneously pursue both confirmation of its Chapter 11 plan and a potential sale process under Section 363 of the Bankruptcy Code to test the market.
The company's financial difficulties were exacerbated by a tax issue that arose during restructuring negotiations. When LifeScan stopped making payments to rebate counterparties to preserve liquidity, it created significant income tax liability for 2024 and potential liability for 2025 that had not been accounted for in the company's financial forecasts.
LifeScan was founded in 1981 and was acquired by Johnson & Johnson in 1986, remaining a central part of J&J's diabetes device business for more than 30 years before being sold to Platinum Equity. The company currently has approximately 1,300 employees globally, with operations in 50 countries.
Porter Hedges LLP and Milbank LLP are serving as co-counsel to the debtors. The confirmation hearing for LifeScan's plan is scheduled for September 30, 2025, with the company expecting to emerge from bankruptcy by the end of the fourth quarter of 2025.
"The Restructuring Transactions are expected to improve [LifeScan's] financial condition and credit worthiness and ensure their continued operations as a going concern," the disclosure statement noted, adding that the company plans to explore opportunities for growth post-bankruptcy, including entry into the continuous glucose monitoring market.
The case is being heard by Judge ARP in the U.S. Bankruptcy Court for the Southern District of Texas, Case No. 25-90259.
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