Nashville, Tenn.-based Envision Healthcare, which operates ambulatory surgery centers and provides physician staffing services, is on the brink of bankruptcy, according to Moody's Investors Service.
The credit rating agency downgraded Envision's debt Sept. 21 to "C," indicating the debt is "typically in default, with little prospect for recovery of principal or interest," according to Moody's.
"The ratings downgrade reflects Moody's view that Envision's capital structure is unsustainable, that the probability of a bankruptcy or major restructuring is high, and that recovery rates for much of the company's debt will be low," the credit rating agency said.
Envision has seen a decline in profitability, and Moody's expects the company's operating performance to continue to deteriorate due to rising interest rates and labor pressures affecting the healthcare industry.
The No Surprises Act, which was implemented in January 2022, and Envision's out-of-network status with UnitedHealthcare will also present challenges for the company, Moody's said.
The rating action comes after a series of transactions, including a restructuring of Envision's senior secured credit facilities.