Envision Healthcare and certain of its wholly owned subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Envision also 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 establish the framework for a consensual and comprehensive restructuring that will position Envision and AMSURG for future growth as two separate businesses. Envision will continue to operate as usual throughout the restructuring process.
Envision is a medical group that delivers physician and advanced practice provider care in settings where patients have the most acute and life-changing needs, including emergency departments, surgical suites, intensive care units and birthing suites, through Envision Physician Services. Additionally, its AMSURG unit partners with physicians to operate more than 250 ambulatory surgery centers, specializing in gastroenterology, ophthalmology and orthopedic care.
“Envision’s teams play a critical role in the functioning of the U.S. healthcare system,” Jim Rechtin, CEO of Envision Healthcare, said. “We are grateful to the Envision clinicians, physician partners and clinical support teammates for their continued commitment to caring for patients when they need it most.”
Restructuring Support Agreement
Envision currently has more than ample cash to continue providing care and services and funding ongoing clinical operations without interruption. The Chapter 11 filing will enable Envision to effect the transactions encompassed in the RSA and facilitate opportunities for long-term growth by reducing its debt and strengthening its capital structure.
Under the terms of the RSA, the AMSURG and Envision Physician Services businesses will be separately owned by certain of their respective lenders. AMSURG will purchase the surgery centers held by Envision for $300 million plus a waiver of intercompany loans held by AMSURG. All of Envision’s debt, with the exception of a revolving credit facility for working capital, will be equitized or cancelled, deleveraging approximately $5.6 billion.
Pending court approval, Envision will use cash collateral generated by ongoing operations to fund operating expenses, including supplier obligations and employee wages, salaries and benefits during the restructuring process. This will enable the company to continue operating its business as usual throughout the process and provide support to critical partners, including clinicians, hospitals, vendors and suppliers.
Envision filed its voluntary petitions in the U.S. Bankruptcy Court for the Southern District of Texas.
The organization’s investment banker is PJT Partners, its financial advisor is Alvarez & Marsal and its legal advisor is Kirkland & Ellis.
