Steward Health Care claims former executives' "greed and bad faith misconduct" led to hospitals chain's bankruptcy
Steward accuses its founder Ralph de la Torre and three others — Michael Callum, James Karam, and Sanjay Shetty — of defrauding the company of more than $245 million.
"Through their greed and bad faith misconduct, [these former insiders] operated Steward with the aim of enriching themselves at the expense of the Company, its creditors, and the patients and communities that Steward served," the new filing alleges. "These insiders pilfered Steward's assets for their own material gain, while leaving the Company and its hospitals perpetually undercapitalized and insolvent."
Once the nation's largest for-profit hospital chain, Steward operated hospitals in Massachusetts, Texas, Florida, Pennsylvania and other states. CBS News found that de la Torre pushed for the company's expansion. By working with a real estate investment firm, Medical Properties Trust, de la Torre helped purchase new medical properties, sell off the real estate, and force the hospitals into costly lease-back arrangements.
A CBS News investigation that spanned nearly two years documented allegations of how private equity investors and de la Torre followed this formula, extracting hundreds of millions of dollars in dividends from the real estate sales, while health care workers and patients struggled to get the life-saving supplies they needed as a result.
Records reviewed by CBS News showed Steward hospitals around the country left a trail of unpaid bills, at times risking a shortage of potentially life-saving supplies. That included a case in a Massachusetts hospital where medical staff says a device that could have stopped the bleeding in a new mother's liver was repossessed by the manufacturer weeks earlier. After being transferred to another hospital, the young woman died just hours after giving birth to her first daughter.
Last August, after filing for bankruptcy, the company sold off six Massachusetts hospitals. The sale of the final two facilities in the state left about 1,200 workers jobless, according to state officials. In a 2024 interview with CBS News, Massachusetts Gov. Maura Healey did not hold back in her assessment of the conduct of Steward executives.
"I'm disgusted. It's selfish. It's greed," she said.
At the time of the patient's death, a spokesperson for Steward told CBS News company executives always put patients first and said they "deny that any other considerations were placed ahead of that guiding principle."
In an earlier statement, the spokesperson said Steward "has actively and meaningfully invested" in its hospital system since its formation, including in Massachusetts, where it took over hospitals that were "failing" and "about to close."
De la Torre also defended the company's actions.
"Steward Health Care has done everything in its power to operate successfully in a highly challenging health care environment," de la Torre said in a company statement in 2024.
This week's complaint lists three major transactions that de la Torre and executives allegedly profited from while leaving Steward hospitals struggling for funds to operate.
In January 2021, de la Torre allegedly took a $111 million dividend payout while the company was struggling financially. The former CEO also pocketed $81.5 million according to the complaint. The court filing also lists the former executives who benefited: Callum, who as vice president for physician services at Steward received $10.3 million. Shetty, then-president of Steward Health Care System received $1.8 million and Karam, who remains a member of Steward's board, received $728,456.
The complaint also claims Steward Health Care International, the international arm of Steward that's majority-owned by de la Torre, received $4.3 million of the dividend payout.
Later that year, Steward claims de la Torre overpaid by $200 million for five Miami-based hospitals acquired from Tenet Healthcare Corporation. The complaint alleges the former CEO pushed for the $1.1 billion deal based on his "personal desire to build a hospital empire in the Miami area, rather than on any independent financial analysis."
According to the complaint, de la Torre then sold assets related to Steward's Medicare Advantage business to a company called CareMax in 2022.
Steward, through its physicians organization, allegedly received $60.5 million in cash, while the bulk of the proceeds — almost $134 million in stock of CareMax — ultimately went to a holding company that was majority-owned by de la Torre, Callum, Shetty and Karam. The complaint alleges de la Torre and named board members "sold valuable" assets and "diverted the proceeds to themselves" while the company went insolvent.
"De la Torre, Callum, and Karam were grossly negligent and breached their duties of care, loyalty, and good faith," according to the filing.
CareMax filed for bankruptcy in February.
While Steward's hospitals were struggling, CBS News previously reported on de la Torre's lavish personal spending, including the purchase of a $30 million yacht in 2021, a multimillion-dollar Texas horse ranch in 2022, and two corporate jets valued at $95 million.
Steward Health Care is now being run by a court-appointed administrator and is trying to claw back funds from its former leaders to pay off its creditors.
De la Torre, who founded the company in 2010, is at the center of a federal probe focused on potential fraud, embezzlement and violations of the Foreign Corrupt Practices Act, sources told CBS News. In 2024, he refused to appear before the Senate Health, Education, Labor and Pensions Committee that had been looking into Steward's bankruptcy, despite being issued a subpoena. Senators took the rare step of holding him in contempt for that failure to appear.
In a statement, a spokesperson for de la Torre says the former CEO "disputes the allegations of wrongdoing and will vigorously defend himself against them."
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DXP's secured leverage ratio or net debt to EBITDA ratio was 2.4:1.0 with a covenant EBITDA of $221.1 million for the last twelve months ending June 30, 2025." Conference Call Information DXP Enterprises, Inc. management will host a conference call, August 7, 2025, at 10:30 a.m. Central Time, to discuss the Company's financial results. The conference call may be accessed by going to Interested investors and other parties can listen to a webcast of the live conference call by logging onto the Investor Relations section of the Company's website at The online replay will be available on the same website immediately following the call. A slide presentation highlighting the Company's results and key performance indicators will also be available on the Investor Relations section of the Company's website. To learn more about DXP Enterprises, Inc., please visit the Company's website at About DXP Enterprises, Inc. DXP Enterprises, Inc. is a leading products and service distributor that adds value and total cost savings solutions to industrial customers throughout North America and Dubai. DXP provides innovative pumping solutions, supply chain services and maintenance, repair, operating and production ("MROP") services that emphasize and utilize DXP's vast product knowledge and technical expertise in rotating equipment, bearings, power transmission, metal working, industrial supplies and safety products and services. DXP's breadth of MROP products and service solutions allows DXP to be flexible and customer-driven, creating competitive advantages for our customers. DXP's business segments include Service Centers, Innovative Pumping Solutions and Supply Chain Services. For more information, go to Non-GAAP Financial Measures DXP supplements reporting of net income with certain non-GAAP measurements, including EBITDA, Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, and Free Cash Flow. This supplemental information should not be considered in isolation or as a substitute for the unaudited GAAP measurements. Additional information regarding EBITDA, Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, Free Cash Flow and net debt referred to in this press release are included below under "Unaudited Reconciliation of Non-GAAP Financial Information". The Company believes EBITDA provides additional information about: (i) operating performance, because it assists in comparing the operating performance of the business, as it removes the impact of non-cash depreciation and amortization expense as well as items not directly resulting from core operations such as interest expense and income taxes and (ii) the performance and the effectiveness of operational strategies. Additionally, EBITDA performance is a component of a measure of the Company's financial covenants under its credit facilities. Furthermore, some investors use EBITDA as a supplemental measure to evaluate the overall operating performance of companies in the industry. Management believes that some investors' understanding of performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing ongoing results of operations. By providing this non-GAAP financial measure, together with a reconciliation to its most directly comparable GAAP financial measure, the Company believes it is enhancing investors' understanding of the business and results of operations, as well as assisting investors in evaluating how well the Company is executing strategic initiatives. Free Cash Flow reconciles to the most directly comparable GAAP financial measure of cash flows from operations as provided below. We believe Free Cash Flow is an important liquidity metric because it measures, during a given period, the amount of cash generated that is available to fund acquisitions, make investments, repay debt obligations, repurchase shares of the Company's common stock, and for certain other activities. Information Related to Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 provides a "safe-harbor" for forward-looking statements. Certain information included in this press release (as well as information included in oral statements or other written statements made by or to be made by the Company) contains statements that are forward-looking. These forward-looking statements include, without limitation, those about the Company's expectations regarding the Company's expectations regarding the filing of the Form 10-Q; the description of the anticipated changes in the Company's consolidated balance sheet and the results of operations and the Company's assessment of the impact of such anticipated changes; the Company's business, the Company's future profitability, cash flow, liquidity, and growth. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future; and accordingly, such results may differ from those expressed in any forward-looking statement made by or on behalf of the Company. These risks and uncertainties include, but are not limited to: the effectiveness of management's strategies and decisions; our ability to implement our internal growth and acquisition growth strategies; general economic and business conditions specific to our primary customers; changes in government regulations; our ability to effectively integrate businesses we may acquire; new or modified statutory or regulatory requirements; availability of materials and labor; inability to obtain or delay in obtaining government or third-party approvals and permits; non-performance by third parties of their contractual obligations; unforeseen hazards such as weather conditions, acts of war or terrorist acts and the governmental or military response thereto; cyber-attacks adversely affecting our operations; other geological, operating and economic considerations and declining prices and market conditions, including supply or demand for maintenance, repair and operating products, equipment and service; inability of the Company or its independent auditors to complete the work necessary in order to file the Form 10-Q in the expected time frame; unanticipated changes to the Company's operating results in the Form 10-Q as filed or in relation to prior periods, including as compared to the anticipated changes stated here; unanticipated impact of such changes and its materiality; ability to obtain needed capital, dependence on existing management, leverage and debt service, domestic or global economic conditions, ability to manage changes and the continued health or availability of management personnel and changes in customer preferences and attitudes. In some cases, you can identify forward-looking statements by terminology such as, but not limited to, "may," "will," "should," "intend," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," "goal," or "continue" or the negative of such terms or other comparable terminology. More information on these risks and other potential factors that could affect the Company's business and financial results is included in the Company's filings with the Securities and Exchange Commission, including in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. DXP ENTERPRISES, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS($ thousands, except share amounts) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Sales $ 498,682 $ 445,556 $ 975,251 $ 858,191 Cost of sales 340,869 307,763 667,173 596,516 Gross profit 157,813 137,793 308,078 261,675 Selling, general and administrative expenses 111,827 100,441 221,577 195,192 Income from operations 45,986 37,352 86,501 66,483 Interest expense 14,744 15,384 29,404 30,928 Other income, net (354 ) (1,035 ) (1,672 ) (3,004 ) Income before income taxes 31,596 23,003 58,769 38,559 Provision for income taxes 7,984 6,310 14,568 10,534 Net income 23,612 16,693 44,201 28,025 Preferred stock dividend 22 22 45 45 Net income attributable to common shareholders $ 23,590 $ 16,671 $ 44,156 $ 27,980 Net income $ 23,612 $ 16,693 $ 44,201 $ 28,025 Foreign currency translation adjustments 2,563 93 2,649 (521 ) Comprehensive income $ 26,175 $ 16,786 $ 46,850 $ 27,504 Earnings per share: Basic $ 1.50 $ 1.05 $ 2.81 $ 1.75 Diluted $ 1.43 $ 1.00 $ 2.67 $ 1.66 Weighted average common shares outstanding: Basic 15,694 15,868 15,696 15,998 Diluted 16,534 16,708 16,536 16,838 DXP ENTERPRISES, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS($ thousands, except share amounts) June 30, 2025 December 31, 2024 ASSETS Current assets: Cash $ 112,930 $ 148,320 Restricted cash — 91 Accounts receivable, net of allowance of $3,665 and $5,172, respectively 361,393 339,365 Inventories 110,758 103,113 Costs and estimated profits in excess of billings 57,260 50,735 Prepaid expenses and other current assets 41,320 20,250 Total current assets 683,661 661,874 Property and equipment, net 107,207 81,556 Goodwill 461,298 452,343 Other intangible assets, net 78,485 85,679 Operating lease right of use assets, net 60,835 46,569 Other long-term assets 20,908 21,473 Total assets $ 1,412,394 $ 1,349,494 LIABILITIES AND EQUITY Current liabilities: Current maturities of debt $ 6,595 $ 6,595 Trade accounts payable 104,764 103,728 Accrued wages and benefits 37,449 41,650 Customer advances 16,018 13,655 Billings in excess of costs and estimated profits 22,906 12,662 Short-term operating lease liabilities 17,071 14,921 Other current liabilities 40,646 50,773 Total current liabilities 245,449 243,984 Long-term debt, net of unamortized debt issuance costs and discounts 620,239 621,684 Long-term operating lease liabilities 45,402 33,159 Other long-term liabilities 33,212 27,879 Total long-term liabilities 698,853 682,722 Total liabilities 944,302 926,706 Commitments and Contingencies Shareholders' equity: Series A preferred stock, $1.00 par value; 1,000,000 shares authorized 1 1 Series B preferred stock, $1.00 par value; 1,000,000 shares authorized 15 15 Common stock, $0.01 par value, 100,000,000 shares authorized; 20,401,857 issued and 15,694,084 outstanding at June 30, 2025 and 20,402,861 issued and 15,695,088 outstanding at December 31, 2024 204 204 Additional paid-in capital 217,982 219,511 Retained earnings 433,826 389,670 Accumulated other comprehensive loss (30,961 ) (33,610 ) Treasury stock, at cost 4,707,773 and 4,707,773 shares, respectively (152,975 ) (153,003 ) Total DXP Enterprises, Inc. equity 468,092 422,788 Total liabilities and equity $ 1,412,394 $ 1,349,494 SEGMENT DATA($ thousands, unaudited) Three Months Ended June 30, Six Months Ended June 30, Sales 2025 2024 2025 2024 Service Centers $ 339,731 $ 306,516 $ 666,806 $ 594,952 Innovative Pumping Solutions 93,540 73,377 179,722 135,592 Supply Chain Services 65,411 65,663 128,723 127,647 Total Sales $ 498,682 $ 445,556 $ 975,251 $ 858,191 Three Months Ended June 30, Six Months Ended June 30, Operating Income 2025 2024 2025 2024 Service Centers $ 50,171 $ 43,855 $ 97,215 $ 84,175 Innovative Pumping Solutions 18,642 13,366 32,049 20,336 Supply Chain Services 5,229 5,823 10,792 11,085 Total Segments Operating Income $ 74,042 $ 63,044 $ 140,056 $ 115,596 RECONCILIATION OF OPERATING INCOME FOR REPORTABLE SEGMENTS($ thousands, unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Income from operations for reportable segments $ 74,042 $ 63,044 $ 140,056 $ 115,596 Adjustment for: Amortization of intangibles 5,327 4,719 10,684 9,088 Corporate expenses 22,729 20,973 42,871 40,025 Income from operations $ 45,986 $ 37,352 $ 86,501 $ 66,483 Interest expense 14,744 15,384 29,404 30,928 Other income, net (354 ) (1,035 ) (1,672 ) (3,004 ) Income before income taxes $ 31,596 $ 23,003 $ 58,769 $ 38,559 RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION($ thousands, unaudited) We define and calculate EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, and amortization. We define and calculate Adjusted EBITDA as Net income attributable to DXP Enterprises, Inc., plus interest, taxes, depreciation, and amortization minus stock-based compensation expense and all other non-cash charges, adjustments, and non-recurring items. We identify the impact of all other non-cash charges, adjustments and non-recurring items because we believe these items do not directly reflect our underlying operations. We define and calculate EBITDA Margin as EBITDA divided by sales. We define and calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by sales. The following table sets forth the reconciliation of EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin to the most comparable U.S. GAAP financial measure (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Income before income taxes $ 31,596 $ 23,003 $ 58,769 $ 38,559 Plus: Interest expense 14,744 15,384 29,404 30,928 Plus: Depreciation and amortization 9,490 8,127 18,624 15,665 EBITDA $ 55,830 $ 46,514 $ 106,797 $ 85,152 Plus: other non-recurring items(1) — 500 235 1,342 Plus: stock compensation expense 1,483 1,212 2,800 2,076 Adjusted EBITDA $ 57,313 $ 48,226 $ 109,832 $ 88,570 Operating Income Margin 9.2 % 8.4 % 8.9 % 7.7 % Net Income Margin 4.7 % 3.7 % 4.5 % 3.3 % EBITDA Margin 11.2 % 10.4 % 11.0 % 9.9 % Adjusted EBITDA Margin 11.5 % 10.8 % 11.3 % 10.3 % (1) Other non-recurring items includes unique acquisition integration costs and other non-cash, non-recurring costs not related to continuing business operations. We define and calculate organic sales to include locations and acquisitions under our ownership for at least twelve months. "Acquisition Sales" are sales from acquisitions that have been under our ownership for less than twelve months and are excluded in our calculation of Organic Sales. "Business Days" are days of the week, excluding Saturdays, Sundays, and holidays, that our locations are open during the year. Depending on the location and the season, our branches may be open on Saturdays and Sundays; however, for consistency, those days have been excluded from the calculation of Business Days. We define and calculate Sales per Business Day as sales divided by the number of Business Days in the relevant reporting period. We define and calculate Organic Sales per Business Day as Organic Sales divided by the number of Business Days in the relevant reporting period. The following table sets forth the reconciliation of Acquisition Sales, Organic Sales and Organic Sales per Business Day to the most comparable U.S. GAAP financial measure (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Sales by Business Segment Service Centers $ 339,731 $ 306,516 $ 666,806 $ 594,952 Innovative Pumping Solutions 93,540 73,377 179,722 135,592 Supply Chain Services 65,411 65,663 128,723 127,647 Total DXP Sales $ 498,682 $ 445,556 $ 975,251 $ 858,191 Acquisition Sales $ 24,605 $ 23,403 $ 55,717 $ 35,178 Organic Sales $ 474,077 $ 422,153 $ 919,534 $ 823,013 Business Days 63 64 126 127 Sales per Business Day $ 7,916 $ 6,962 $ 7,740 $ 6,757 Organic Sales per Business Day $ 7,525 $ 6,596 $ 7,298 $ 6,480 We define and calculate free cash flow as net cash (used in) provided by operating activities less purchases of property and equipment. The following table sets forth the reconciliation of Free Cash Flow to the most comparable GAAP financial measure (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net cash from operating activities $ 18,646 $ 14,735 $ 21,619 $ 41,724 Less: purchases of property and equipment (10,346 ) (8,825 ) (30,260 ) (11,719 ) Free Cash Flow $ 8,300 $ 5,910 $ (8,641 ) $ 30,005 View source version on Contacts Kent YeeSenior Vice President,
