Envision Healthcare, a leading physician staffing firm, has officially filed for bankruptcy after reports surfaced last week about its staggering $7 billion debt. The company announced its voluntary petitions for reorganization under Chapter 11 of the US Bankruptcy Code, alongside a restructuring support agreement (RSA) with key stakeholders, which garnered support from over 60% of its $7.7 billion debt.
As part of the RSA, Envision intends to separate itself from AMSURG, its ambulatory surgical center operating subsidiary. AMSURG has agreed to purchase Envision’s surgery centers for $300 million, along with waiving intercompany loans held by AMSURG.
During the bankruptcy process, Envision will continue its business operations as usual, ensuring minimal disruption to its services. CEO Jim Rechtin expressed gratitude to Envision’s clinicians, physician partners, and clinical support teams for their unwavering commitment to patient care.
Earlier this month, The Wall Street Journal reported Envision’s impending chapter 11 bankruptcy filing due to substantial debt and labor shortage issues. The bankruptcy would erase the investment made by private equity firm KKR, which took Envision private in a $5.5 billion buyout in 2018.
Envision cited various financial challenges since 2018, including a significant decline in patient volumes at the onset of the COVID-19 pandemic and the impact of the No Surprises Act, which limits balance billing. The company faced exclusion from payers’ networks, resulting in subpar reimbursement and increased claim denials. The nationwide shortage of clinicians and rising inflation further compounded Envision’s financial woes.
Envision plans to equitize or cancel all its debt, excluding a revolving credit facility for working capital, amounting to approximately $5.6 billion. The company intends to utilize cash collateral generated by ongoing operations to cover expenses during the restructuring process, including employee wages and salaries.
Following Envision’s bankruptcy announcement, medical staffing firms Jackson Healthcare and LRS Healthcare have signed a definitive agreement to merge in the second half of this year. LRS Healthcare specializes in connecting nursing and allied healthcare professionals with provider organizations across the United States. The merger aims to leverage the combined strengths of both companies to deliver exceptional services to customers and healthcare professionals.
