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HomeHealthHealth careMoody's warns Envision Healthcare at risk for bankruptcy

Moody’s warns Envision Healthcare at risk for bankruptcy

Moody’s Investors Service added to Envision Healthcare’s monetary woes by downgrading the outpatient surgical procedure and doctor staffing firm’s debt on Wednesday.

“The ratings downgrade reflects Moody’s view that Envision’s capital structure is unsustainable, that the probability of a bankruptcy or major restructuring is high and that recovery rates for much of the company’s debt will be low,” a Moody’s report says. Envision declined to remark. 

The credit standing entity assigned a “C” ranking, the bottom amongst non-investment-grade bonds that is sometimes utilized to money owed in default with little prospect for restoration on curiosity and principal balances. In its report, Moody’s referenced declining profitability, weak liquidity and an anticipated poor working efficiency on account of labor prices and rising rates of interest.

Nashville, Tennessee-based Envision Healthcare, which generates roughly $7 billion in annual income, gives emergency companies and doctor outsourcing and operates greater than 250 ambulatory surgical procedure facilities in 34 states. Private fairness agency KKR acquired Envision for almost $10 billion in 2018. 

Analysts undertaking Envision may go into default inside the subsequent couple of years, mentioned Jaime Johnson, senior healthcare analyst at Moody’s. 

Envision has restructured a few of its debt by issuing new agreements by way of subsidiary AmSurg and increasing maturity dates, which has improved short-term liquidity, however the restructuring didn’t remove any debt, Johnson mentioned. “It’s pretty clear to us that they’re going to run out of money at some point,” she mentioned.

Envision has struggled all through the pandemic together with web losses in the course of the first half of this yr. The firm continues to battle with UnitedHealth Group over claims following the insurer’s choice to take away Envision from its community final yr. The No Surprises Act may even deal a blow to earnings, and Envision has lately come below fireplace for profiting off emergency division sufferers with unexpectedly excessive payments.

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