Bills and chills

30 March 2020 By Robert Cyran Follow @rob_cyran

KKR and Blackstone gambled big on rising medical expenditures, buying emergency room staffing firms Envision and TeamHealth. Wars with insurers over aggressive billing practices left both companies weak. Cancelled procedures from Covid-19 will put both in critical condition.

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On March 18, the Centers for Medicare & Medicaid Services released guidance to limit non-essential adult elective medical and surgical procedures amid the Covid-19 outbreak.

According to the Ambulatory Surgery Center Association, 32 states have made official statements on the issue of elective procedures during the pandemic, generally advising against or prohibiting them from being performed. The limitations vary from weeks to indefinitely.

The debt of Envision Healthcare and TeamHealth are both trading at distressed levels. Envision’s senior unsecured debt due in 2026 currently yields 30% according to Refinitiv data. TeamHealth’s senior unsecured due in 2025 currently yields 27%.

Blackstone bought TeamHealth in 2016 in a deal worth $6.1 billion. KKR acquired Envision for $5.6 billion in 2018.

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