$10B Buyout Goes Bust: Envision Healthcare Backed By KKR Files Bankruptcy

The doctor staffing company Envision Healthcare declared bankruptcy five years after KKR & Co Inc's (NYSE: KKR) $10 billion leveraged purchase that took Envision Healthcare private. 

The move will likely wipe out the $3.5 billion stake that private equity firm KKR acquired in the physician-staffing company in 2018.

The company attributed the filing to sharp decreases in patient volumes due to the COVID-19 pandemic, its exclusion from health insurer networks and inappropriate reimbursement for care provided, "flawed implementation of the No Surprises Act," and a national clinician shortage, and rising inflation.

Envision has entered into a Restructuring Support Agreement (RSA) with its key stakeholders supported by more than 60% of the company's approximately $7.7 billion in debt obligations.

The terms of the RSA will position Envision and AmSurg for future growth as two separate businesses.

AmSurg will purchase the surgery centers held by Envision for $300 million plus a waiver of intercompany loans held by AmSurg. 

Envision's debt, except for a revolving credit facility for working capital, will be equitized or canceled, deleveraging approximately $5.6 billion.

Citing the court filing, the Wall Street Journal noted that Envision plans to use $655 million in cash on hand to finance its stay in Chapter 11, and its aims to exit bankruptcy within five months.