%1

Envision Healthcare has filed for chapter 11, beginning one of the largest healthcare-related bankruptcy cases ever and likely wiping out the $3.5 billion stake that private-equity firm KKR acquired in the physician-staffing company in 2018, WSJ Pro Bankruptcy reported. KKR’s loss on Envision would be among the steepest write-downs the private-equity firm has swallowed in recent years and highlights some of the continuing instability in the healthcare industry. KKR has already written off its investment in Envision. KKR and its co-investors bought Envision hoping to expand its business of helping hospitals staff emergency rooms and other departments. The company was taken private for almost $10 billion including debt, with KKR and co-investors’ stake in the company worth around $3.5 billion. But, in recent years, Envision has faced a litany of headwinds. High labor costs, the lingering effects of the pandemic and a contract dispute with insurer UnitedHealth Group took their toll on the company. Envision was also embroiled in a costly public fight over federal legislation that took aim at part of the company’s business model by banning healthcare providers from going after patients for bills that their insurers refuse to cover. A new management team installed in 2020 suffered from a “whiplash-inducing onslaught of obstacles and complications,” Chief Restructuring Officer Paul Keglevic said in a Monday court filing.

Hospital systems Steward Health Care and Prospect Medical Holdings, among the largest tenants of health care real estate owner Medical Properties Trust, have brought on financial advisers to help refinance credit lines after some recent financial struggles, WSJ Pro Bankruptcy reported. Steward has hired Guggenheim Securities to refinance asset-based loans due at the end of this year. Prospect Medical is being advised by Houlihan Lokey on a refinancing effort. Past private-equity owners of Prospect and Steward each sold health facilities and real estate belonging to each company years ago to MPT in deals that left the hospital systems paying rent on property they previously owned. MPT, one of the country’s largest health care landlords, has itself faced questions about its exposure to Steward and Prospect after a challenging period for hospitals.

Drugmaker Athenex Inc. and certain of its subsidiaries voluntarily filed for chapter 11 protection, the company said on Sunday, according to Reuters. Athenex reached an agreement with its lenders to move forward with an expedited sale process of its assets, the company said in a statement. The Buffalo, N.Y.-based company has listed estimated assets and liabilities in the range of $100 million-$500 million, according to a filing with the U.S. Bankruptcy Court for the Southern District of Texas. The assets to be sold would be across its primary businesses of Athenex Pharmaceutical Division (APD), Orascovery, and Cell Therapy, the company said, adding that it expects the expedited process to be completed by July 1, 2023. The company said it has sufficient resources to support Athenex Pharma Solutions operations, and fulfill APD customer orders during the sale process.

As U.S. health care costs continue reaching enormous levels, many Americans have turned to medical credit cards as a way to finance their medical bills, YahooFinance.com reported. A new report from the Consumer Financial Protection Bureau (CFPB), however, is warning about the high fees and costs that come with those cards. “The growing promotion and use of medical cards and installment loans can increase the financial burden on patients who may pay more than they otherwise would pay and may compromise medical outcomes,” the report stated. “When people are unable to pay their medical bills, research shows this can deter them from seeking needed health care in the future. The use of medical cards and installment loans, and their promotion by medical providers, has ripple effects on the broader cost of health care, consumer well-being, and the economy.” An estimated 41% of Americans are grappling with medical debt of some kind. Medical credit cards typically offer deferred interest payment periods for many of these charges. Between 2018 and 2020, however, people paid $1 billion in these payments for charges, according to the CFPB findings, on top of $23 billion in overall expenses. The total fees vary by credit score as well. For example, people with credit scores below 619 incurred interest for roughly 34% of their health care purchases, with the CFPB report noting that those with lower credit scores may be more likely to incur interest since they’re also more likely to have shorter periods before being charged deferred interest.

Envision Healthcare is planning to file for chapter 11 bankruptcy protection, capping one of the biggest losses ever for the physician-staffing company’s backers at private-equity firm KKR, the Wall Street Journal reported. The bankruptcy filing, which could be made as soon as this weekend, will wipe out the investment of KKR, which took Envision private in a $5.5 billion buyout in 2018. Including debt, the deal was worth about $10 billion, making it one of KKR’s largest investments in the health care industry. Envision now has around $7 billion of debt outstanding, much of which trades at under 10 cents on the dollar as the company’s finances have steadily deteriorated over the last two years. They have been pressured by high labor costs, a bruising battle with insurer UnitedHealth and federal legislation that took aim at a key component of Envision’s business model. Much of Envision’s debt will be swapped for shares in the reorganized company. Envision had been exploring a chapter 11 bankruptcy filing to restructure its debt burden, The Wall Street Journal previously reported. The company missed a March 31 deadline to report quarterly financials and skipped an interest payment due in April, setting the clock on a 30-day grace period before its lenders could push the company into an involuntary bankruptcy.

Invacare announced yesterday that it successfully emerged from chapter 11 protection at the end of last week, MassDevice.com reported. Elyria, Ohio-based Invacare began financial restructuring activities that included filing for bankruptcy in February. This saw the company enter into a restructuring support agreement (RSA) that covers substantially all of its debt-holders. That includes its term loan lender, all holders of convertible senior secured notes and holders of a majority of convertible senior unsecured notes. The RSA included a reduction of Invacare’s funded debt by approximately $240 million. It also featured a backstop for a rights offering to holders of claims, providing Invacare with $60 million in equity capital.

The Consumer Financial Protection Bureau (CFPB) on May 4 published a report on high-cost specialty financial products, such as medical credit cards, that are sold to patients as a way to alleviate the growing costs of medical care, according to a CFPB press release. Patients are typically offered these products in a medical provider’s office even when their insurance may cover the procedure or they qualify for a hospital’s reduced or no-cost financial assistance program. The report finds that these specialty products are typically more expensive for patients than other forms of payment, including conventional credit cards, with interest rates often reaching above 25%. These products can add, instead of remove, the financial stress that comes with medical bills, including decreased access to credit, costly and lengthy collection litigation, and an increased likelihood of bankruptcy.

Lannett Co. said it plans to file for bankruptcy with a restructuring agreement that will help the generic-pharmaceutical company cut $511 million in debt, WSJ Pro Bankruptcy reported. Trevose, Pa.-based Lannett said yesterday it plans to file for chapter 11 in the U.S. Bankruptcy Court in Wilmington, Del., to restructure its debt with secured lenders through a debt-for-equity swap, a deal that has support from holders of more than 80% of its senior secured notes due in 2026 and all second-lien lenders, according to a press release. The company will hand over control to its secured lenders as a result of the restructuring, Lannett said. The company had roughly $750 million in total liabilities as of late December, according to a regulatory filing. Lannett in February raised its revenue guidance for fiscal year 2023 to a range of $285 million to $305 million, while reporting a narrower second-quarter loss of 88 cents per share. In early April, Lannett said “continued competitive pressures” were among factors that triggered its negotiation with key secured creditors about a balance-sheet restructuring. At that time, the company also said it was skipping an interest payment on its unsecured convertible notes. That would trigger a debt default if the company fails to make the payment within 30 days.

Akorn Pharmaceuticals has issued a voluntary recall of its drugs following the company's decision to close shop, USA TODAY reported. The recall list is comprised of 75 human drugs and 9 veterinary drugs, and is not associated with any adverse events, but with the company's February chapter 7 bankruptcy filing, in which they have agreed to shut down. The shutdown includes the closing of their quality program, meaning "the company will not be able to support or guarantee that the products will meet all intended specifications through the labeled shelf life of the product," the company stated in a press release. Akorn products were distributed to wholesalers, retailers, manufacturers, medical facilities, repackagers and consumers via the internet. The company is notifying distributors by mail and asking them to notify consumers and retailers about the recall. They are further advising that consumers discard their recalled products and get in touch with their doctor. For questions regarding the recall, consumers can get in touch with an Akorn at 800-932-5676 available Monday through Friday from 8 a.m. to 5 p.m. CDT.