Nashville, Tenn.-based Envision Healthcare has filed for Chapter 11 bankruptcy five years after New York City-based KKR & Co. acquired Envision in a $9.8 billion deal.
Six things to know:
1. Envision has entered into a restructuring support agreement with key stakeholders supported by more than 60 percent of the company's $7.7 billion in debt obligations. The company expects that support to continue to grow in the coming days.
2. As part of the restructuring plan, Envision Physician Services and AmSurg, which owns and operates ambulatory surgery centers, will operate as two separate businesses. AmSurg will acquire the ASCs held by Envision for $300 million plus a waiver of intercompany loans held by AmSurg.
3. All of Envision's debt — excluding a revolving credit facility for working capital — will be equitized or cancelled, deleveraging about $5.6 billion, the company said in a May 15 news release. Envision said it will continue to operate as usual throughout the restructuring process.
4. Envision said the Chapter 11 filing will allow it to effect the transactions included in its restructuring plan and facilitate long-term growth opportunities by reducing its debt and boosting its capital structure.
5. Pending court approval, Envision will use cash generated by operations to fund expenses, including supplier obligations and employee wages, salaries and benefits during the restructuring process.
6. Envision cited various challenges that contributed to its financial position, including declining patient volumes, payers excluding Envision clinicians from their networks and not providing adequate reimbursement for care, the implementation of the No Surprises Act, rising inflation and the national clinician shortage.