A U.S. Bankruptcy Court on Wednesday approved private equity-backed radiology provider Envision Healthcare’s reorganization plans, the same day the company’s CEO said he’s leaving to lead Humana.
The Nashville, Tennessee-based multispecialty group voluntarily filed for Chapter 11 in May, seeking to cancel $5.6 billion in debt. Envision has been challenged in recent years by drops in patient volumes amid the COVID-19 pandemic, payment disputes with health insurers, clinician shortages and rising inflation.
Under terms of the deal, Envision will eliminate 70% of its obligations accumulated prior to filing the bankruptcy petition.
“I am pleased to have reached an agreement with our key stakeholders and look forward to emerging from Chapter 11 in the coming weeks,” CEO Jim Rechtin, MBA, said in an Oct. 11 announcement. “The confirmed plans allow Envision to emerge from the process in a strong position to navigate the current healthcare environment and take advantage of future opportunities to grow while continuing to deliver high-quality care to patients when they need it most.”
Envision employs more than 17,000 clinicians, primarily in emergency and hospitalist medicine, anesthesiology and neonatology. Another 500 of its physicians practice in radiology, completing roughly 8 million reads last year, according to its 2022 Clinical Impact Report released in April (and confirmed by a spokesperson). This will mark the largest loss ever for its private equity backers at KKR, which invested nearly $10 billion (including debt) as part of a highly leveraged buyout completed in 2018.
After exiting bankruptcy, Envision and its ambulatory surgery center platform, AmSurg, will separate into two standalone companies with different leadership teams and ownership groups. Finalization of the bankruptcy process is subject to “customary closing procedures and conditions,” with Envision hoping to emerge from the proceedings by the end of this month.