Envision files for Chapter 11

Envision Healthcare filed for Chapter 11 bankruptcy Monday morning, ending a yearslong saga.

Why it matters: It could be one of the largest health care-related bankruptcy cases ever, the Wall Street Journal reports.

Details: Nashville-based Envision estimated assets and liabilities in the range of $1 billion to $10 billion each, the company said in a court filing.

• Envision entered a restructuring support agreement for debt obligations of about $7.7 billion.
• Via that restructuring, Envision's ambulatory surgery unit Amsurg, and its doctor practice Envision Physician Services, will now be separately owned.
• Envision's Amsurg unit will buy surgery centers held by the company for $300 million, along with a waiver of intercompany loans held by Amsurg, Envision said in a statement.
• Aside from a revolving credit facility, Envision's debt will be canceled, deleveraging the company's balance sheet by about $5.6 billion, it said.

Catch up quick: KKR was the fourth private equity firm to own Envision, acquiring the business for $9.9 billion in 2018.

• The transaction was supported by $8.05 billion of debt financing in the form of a $5.05 billion term loan B, an $850 million loan, and a $1.96 million senior secured first-lien term loan from UBS, Citigroup, Sierra Income BDC, and a syndicate of other lenders, per PitchBook.
• High labor costs, an ongoing battle with insurer UnitedHealth around emergency room claims, and federal legislation aimed at clipping surprise medical bills have dragged down the company's margins in recent years.
• In March, Envision missed a deadly to report quarterly financials and skipped an interest payment due in April.

What we're watching: Amsurg is a logical spin-out candidate, given it's less impacted by hospital volumes and the No Surprises Act, one health care banker says.

Envision declined to comment beyond what it said in the court filing.