KKR Said to Be Near Deal to Acquire Envision Healthcare

Posted June 10, 2018 8:31 p.m. EDT

KKR, the private equity giant, is near a deal to buy Envision Healthcare, a person briefed on the matter said Sunday, months after the company put itself up for sale as controversy over its hospital billing practices mounted.

The deal, which would be one of the biggest by a private equity firm in recent years, reflects Wall Street’s continued interest in the health care industry.

Envision, the product of a merger in 2016 of two hospital service providers, is one of the country’s biggest doctor-staffing companies, including for emergency room services. It also runs outpatient surgery centers. The company has gained business from hospitals that have come to rely on outside contractors to increase the efficiency of some areas, like emergency rooms, that have been financial drains in the past.

The company lost $228 million last year, though it collected $7.8 billion in revenue.

Envision has been under scrutiny for several months after The New York Times reported on large bills that have come from its physician-staffing business for emergency rooms. A study conducted by Yale found that hospitals where Envision’s Emcare unit operated appeared to charge more out-of-network bills for at least one insurer.

Questions about Envision’s billing practices led to scrutiny from Sen. Claire McCaskill, D-Mo., and lawsuits from investors.

In October, the company said it had hired advisers to consider a potential sale.

Under the terms of the proposed deal, KKR would pay about $46 a share in cash, according to the person briefed on the matter, who was not authorized to speak publicly. That would be about 5 percent higher than Envision’s closing stock price Friday.

At that price, Envision’s equity value would be about $5.5 billion. Including the assumption of the company’s long-term debt, the enterprise value of a transaction would be about $10 billion.

KKR is no stranger to Envision. Last year, the two struck a deal in which Envision would sell its ambulance operations to Air Medical Group, a company owned by the private equity firm, for about $2.4 billion.

News of KKR’s negotiations with the company was reported earlier by The Wall Street Journal.