Envision Healthcare, a private equity-backed physician services company and ambulatory surgery center operator, plans to file for Chapter 11 bankruptcy as early as this weekend, The Wall Street Journal reported May 10.
Five things to know:
1. Envision has been battling high labor costs and a lengthy legal dispute with UnitedHealthcare, which recently ended with the insurer having to pay Envision $91 million in damages. UnitedHealthcare also filed its own suit against Envision, alleging it overcharged the insurer by billing for unnecessarily complex care during what should have been routine visits.
2. The No Surprises Act, implemented in January 2022, and Envision's out-of-network status with UnitedHealthcare also presented significant difficulties. Envision had already moved many of its high-margin out-of-network relationships with payers in-network and initiated a corporate policy prohibiting surprise billing, which ate into its bottom line, according to the report.
3. Envision has about $7 billion of debt outstanding and has been exploring bankruptcy to restructure its debt burden, according to The Journal. The company missed a March 31 deadline to report quarterly financials and skipped an interest payment due in April, marking a 30-day grace period before Envision's lenders could push it into an involuntary bankruptcy.
4. New York City-based KKR & Co. acquired Envision in a $9.8 billion deal and took the company private in 2018.
5. Financial experts predict an increase in bankruptcies this year as companies face higher financing costs and as recession concerns grow, according to the report.