Envision Healthcare is planning to file for Chapter 11 bankruptcy as soon as this weekend, as the private equity-backed physician staffing firm struggles with legal battles against UnitedHealthcare and $7 billion in outstanding debt, sources told The Wall Street Journal.

A bankruptcy filing would wipe out private equity firm KKR’s investment in Envision. KKR shelled out over $5 billion in 2018 to take Envision private, in a deal valued at $9.9 billion including debt. A bankruptcy filing from Envision would be one of the steepest losses in KKR’s history, according to the report.
The potential filing comes after Envision has struggled financially in recent years as legal battles with UnitedHealthcare have strained the staffing firm and the COVID-19 pandemic caused delayed patient procedures, physician burnout and wage inflation, according to the report.
Late last year, Moody’s Investors Service downgraded Envision’s credit rating to the lowest notch on its scale, reflecting a high probability of bankruptcy or a major restructuring. Moody’s cited industry headwinds and the staffing firm’s weak liquidity and declines in profit.
Envision’s financial status has declined, with the company generating more than $1 billion in EBITDA the year ended September 2020 to less than $250 million two years later, sources told the Journal.
The staffing firm has been tangled in multiple dueling lawsuits with insurer UnitedHealthcare over payment to its physicians. In early 2021, Envision lost its in-network status with UnitedHealthcare over payment disputes.
Last week, Envision announced that it was awarded $91 million from an arbitration panel for payment disputes in 2017 and 2018. At the time, Envision CEO Jim Rechtin said it had three outstanding lawsuits against UnitedHealthcare that would take “several more years” to resolve.
The company missed a March deadline to report quarterly financials and skipped an interest payment due last month, which started a countdown before lenders could force an involuntary bankruptcy, according to the report.