Platinum Equity Plans to Reorganize LifeScan Diabetes Testing Business in Chapter 11 Filing

As a person living with Type 1 diabetes (T1D) and hypoglycemia unawareness, I rely on traditional fingerstick blood glucose monitoring (BGM) to stay safe. CGMs may be the future for some, but they're not a reliable replacement for patients like me. CGMs can miss dangerous lows until it is too late, or report erroneous data at critical moments. The collapse of a major Blood Glucose Monitoring (BGM) supplier like LifeScan isn't just a financial story — it's a potential threat to patient safety.

Back in 2017, Johnson & Johnson (J&J) began retreating from its diabetes business. First came the shutdown of Animas Corp., its insulin pump unit. Then it offloaded Calibra Medical, maker of a wearable insulin patch, to CeQur. Finally, in 2018, J&J sold LifeScan https://www.prnewswire.com/in/news-releases/johnson--johnson-announces-binding-offer-from-platinum-equity-to-acquire-lifescan-inc-677074533.html — maker of the OneTouch blood glucose meters and test strips — to the private equity firm Platinum Equity for $2.1 billion https://www.globenewswire.com/news-release/2018/10/02/1588268/0/en/Platinum-Equity-Completes-2-1-Billion-Acquisition-of-LifeScan-From-Johnson-Johnson.html.

I'm not a big fan of the idea of private equity in the healthcare space, but the reality is that Platinum failed to cut LifeScan's expenses or grow its revenues, while also increasing rebates paid to Pharmacy Benefit Managers (PBMs) contingent upon "formulary exclusion" of all competing BGM brands.

At the time of sale, LifeScan held about 45% of the traditional fingerstick testing market. But even then, the future was clear: Continuous Glucose Monitors (CGMs) were ascendant among insulin users, and BGM was already being commoditized thanks to PBM profiteering.

Fast-forward to 2025, and Platinum's LifeScan acquisition has hit a wall. On July 7, 2025, the firm announced plans to restructure the business through a Chapter 11 bankruptcy filing https://www.businesswire.com/news/home/20250715827575/en/LifeScan-Reaches-Milestone-Transaction-to-Improve-Financial-Flexibility-and-Enable-Future-Focused-Investments/.

LifeScan's restructuring plan has support from its first- and second-lien lenders, meaning Platinum keeps control without putting in another dime. But third-lien creditors — namely insurance company–owned PBMs — are still waiting for a bankruptcy court to decide what, if anything, they'll get.

According to Bondoro Insights https://bondoro.com/lifescan/, LifeScan owes nearly $676 million in unpaid rebates to the three biggest PBMs: 

• CVS Caremark (Aetna): $244.7 million
• OptumRx (UnitedHealthcare): $234.9 million
• Express Scripts (Cigna): $196.3 million

And here's the kicker: the PBMs might walk away with nothing.

A commenter on my blog summed it up perfectly: "I find it highly amusing that PBMs are getting the shaft from private equity. Is there no honor among thieves?"

It's hard not to chuckle. PBMs are notorious for pocketing manufacturer rebates intended to reduce patient out-of-pocket costs, only to use those funds to enrich themselves — and their commercial health insurance company parent companies. Now they're on the losing end of a financial shell game they usually run.

Max Frumes of 9fin, who oversees global coverage of distressed debt and restructuring, called LifeScan's BGM business a "melting ice cube" https://9fin.com/insights/lifescan-deal-platinum-equity/  — a fading revenue stream in a CGM-dominated world. Still, fingerstick testing isn't obsolete. Most insurance plans still don't cover CGMs for non–insulin users (which explains Dexcom's big announcement that its Stelo product would be sold OTC; rival Abbott also sells an OTC CGM which is branded as the Libre Rio), plus most doctor's offices still use BGM for triage.

Again, for patients like me, CGMs are not an entirely dependable substitute. I need fingerstick tests to detect and confirm hypoglycemia that CGMs can be too slow to pick-up or even miss completely. This isn't a matter of convenience — it's a matter of survival.

Interestingly, while LifeScan was circling the drain, Roche — another BGM heavyweight — took a different approach. Unable to sell its own BGM business and not being on many insurance company preferred formularies, Roche partnered with Mark Cuban's Cost Plus Drug Company back in 2022 to offer Accu-Chek supplies directly to consumers https://www.accu-chek.com/news/roche-and-mark-cuban-cost-plus-drug-company-team-deliver-affordable-access-diabetes-testing/. That partnership bypassed PBMs entirely, offering patients far more affordable prices without the rebate games.

The cash-pay model had its roots in a fiery 2009 patient summit with Roche, where I was present. Patients challenged the company's presumption that insurance always covered test strips — ignoring growing deductibles and cost-sharing. Roche eventually realized that rebate contracts weren't the only viable route to market.

That insight proved prescient. In May 2025, Aetna/CVS Caremark informed patients it was dropping OneTouch in favor of Accu-Chek as its preferred BGM brand — effective around the same time LifeScan filed for bankruptcy. Now, those same PBMs may get $0.40 on each dollar they're owed, although it's also a possibility they'll never collect a cent of the rebates LifeScan owes them.

Some analysts argue PBM rebates should be prioritized in bankruptcy because they're "essential" to the business. But let's be honest: PBMs are more like financial parasites than partners. Their rebate-driven sales model has distorted prices, stifled competition, and hurt patients for years. Maybe it's about time their influence shrinks.

What's next for LifeScan?

Realistically, Platinum overpaid in 2018. Ideally, the LifeScan business would have been included as part of its spinoff of former businesses including Band-Aids and Tylenol called Kenvue, but Platinum Equity offered the company more money, so that's where things are now. LifeScan entering the CGM market now would be a long-shot, with Abbott and Dexcom dominating that space — and it would eat into LifeScan's already slim margins. LifeScan's time is running out — and private equity doesn't tend to play the long game.

For now, it seems the PBMs — long the masters of the rebate racket — have finally been outmaneuvered.