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Almost 90% of Most Distressed Healthcare Companies are Owned by PE Firms

January 3, 2023

A new report by Moody’s Investors Service has found that healthcare companies in North America are increasingly facing credit rating downgrades and potential defaults, including 34 companies rated B3 negative or lower.[1] PESP has found that 30 of those 34 companies most at risk are currently owned or controlled by private equity firms – about 88%.

The Moody’s analysis, reported on by Fierce Healthcare, found that “Among 193 rated North American-based healthcare companies, 34, or nearly 18%, were rated B3 negative or lower as of Nov. 30, up from nine, or about 4%, of rated healthcare companies as of Dec. 31, 2015.”[2]

Becker’s Hospital Review obtained the list of the 34 healthcare companies that are at risk of default.[3] PESP has identified the 30 private-equity-owned companies below. Altogether, the companies have over 271,000 employees.[4]

Among the largest companies on the list is KKR’s physician staffing firm Envision Healthcare, which PESP researcher Mary Bugbee wrote about in a December 2022 report. Bugbee pointed out that Envision’s mounting distress is linked to increased regulatory scrutiny of surprise medical billing, which occurs when patient seeks care at a supposedly in-network provider but is treated by out-of-network physicians, resulting in unexpected and sometimes exorbitant medical bills. Envision’s business strategy appears to have historically relied on staying out-of-network with patients’ insurers in order to extract higher payments. Saddled in billions in debt under KKR, the company has been in a vulnerable condition as market conditions and regulations have changed in recent years.[5]

“Under KKR’s ownership,” Bugbee wrote, “Envision has transformed from a profitable company and desirable acquisition target purchased in one of the largest leveraged buyouts since the financial crisis to a financially distressed one at high risk for bankruptcy and facing reputational fallout from its business practices.”[6]

Another large company on the list is Sevita (formerly known as the The Mentor Network and Civitas Solutions), which is owned by private equity firms Centerbridge Partners and the Vistria Group.[7] Sevita is one of the largest for-profit foster care companies in the US, and also provides residential and community services to children and adults with intellectual and developmental disabilities.[8]

In our February 2022 report “The Kids Are Not Alright: How Private Equity Profits Off of Behavioral Health Services for Vulnerable and At-Risk Youth,” PESP found that Centerbridge and Vistria have collected almost half a billion dollars in debt-funded dividends from Sevita over the course of their two-year ownership even as the company faced ongoing regulatory scrutiny for quality and safety concerns including numerous allegations of abuse, neglect, and deaths at its foster care and residential programs.[9]

Other notable companies on the list:

Top PE-Owned Distressed Healthcare Companies

CompanyPE Firm(s)TypeEmployeesYear acquiredMoodys Rating
Air MethodsAmerican Securities and AlpInvest PartnersAir ambulances4,2242017Caa3-P.D Caa3 Stable
Alcami CorporationMadison Dearborn Partners, AresPharmaceuticals9932018Caa1-PD Caa1 Stable
Athletico Physical Therapy (Athletico Holdings)BDT Capital Partners, LLCPhysical therapy3,9672016B3-PD B3 Negative
Avalign HoldingsLinden Capital PartnersMedical devicesn/a2018Caa1-PD Caa1 Stable
Aveanna HealthcareBain Capital, JH WhitneyHome health33,0002017Caa1-PD Caa1 Negative
BVI Medical (BVI Holdings Mayfair Limited)TPG CapitalMedical devices6102016Caa1-PD Caa1 Negative
Elara Caring (BW NHHC Holdco)Blue Wolf Capital Partners LLC and Kelso & CompanyHome health32,0002016Caa3-PD Caa3 Stable
Cano Health, LLCInTandem Capital Partners – 34% stakePrimary care4002017Caa1-PD Caa1 Stable
Covenant Physician PartnersKKRPhysician practices1,7352017Caa1-PD Caa1 Stable
Envision Healthcare CorporationKKRPhysician staffing69,0002018C-PD C
ExactechTPG CapitalMedical devices9892018Caa2-PD Caa2 Stable
Orchid Orthopedics (Femur Buyer)Nordic CapitalMedical devices2,0252019Caa2-PD Caa2 Stable
American Medical Technologies (Gordian Medical)One Equity Partners and The Silverfern GroupSenior care services3132020Caa1-PD Caa1 Stable
LifeScan Global CorporationPlatinum EquityMedical devices2,0962018Caa2-PD Caa2 Stable
Drive DeVilbiss Healthcare (Medical Depot Holdings)Clayton, Dubilier & RiceMedical devices7622017Caa2-PD Caa2 Stable
Midwest Veterinary PartnersShore Capital PartnersVeterinary care4212017B3-PD B3 Negative
Sevita (National Mentor Holdings)Centerbridge Partners LP, The Vistria Group and Madison Dearborn Partners, LLCDisability services, foster care40,0002019Caa1-PD Caa1 Stable
Numotion (NMN Holdings III)AEA InvestorsMedical devices1,6852018B3-PD B3 Negative
One Call CorporationKKR, Blackstone Credit, Chatham Asset ManagementWorkers’ compensation n/a2019Caa1-PD Caa1 Stable
AccentCare (Pluto Acquisition I)Advent InternationalHome health, hospice30,0002019B3-PD B3 Negative
Quorum Health CorporationDavidson Kempner and GoldenTree Asset ManagementHospitals9,2002020Caa1-PD Caa1 Stable
Radiology PartnersNew Enterprise Associates, Future Fund, Starr Investment HoldingsRadiology2,8002019Caa1-PD Caa1 Stable
Solis (SM Wellness Holdings)Madison Dearborn PartnersMammography services5072018B3-PD B3 Negative
Sound Inpatient PhysiciansSummit Partners and OptumHealthPhysician staffing2,4462018Caa2-PD Caa2 Stable
Team Health HoldingsBlackstonePhysician staffing15,0002017Caa3-PD Caa3 Stable
Tecomet (TecoStar Holdings)Charlesbank Capital PartnersMedical devices2,5002017Caa3-PD Caa3 Stable
U.S. Renal CareBain Capital, Summit Partners, and Revelstoke Capital PartnersRenal care8192019Caa1-PD Caa1 Stable
US Radiology SpecialistsWelsh, Carson, Anderson & StoweRadiology2,8002018B3-PD B3 Negative
Viant Medical HoldingsJLL Partners and Water Street Healthcare PartnersMedical devices6,0002016Caa1-PD Caa1
Vyaire MedicalApax PartnersMedical devices5,0002016Caa2-PD Caa2 Stable

Sources: Moody’s Investor Service and PitchBook (accessed December 2022).

[1] Heather Landi, “Healthcare companies’ default risk steadily rising, with most owned by private equity: Moody’s,” Fierce Healthcare, December 12, 2022.

[2] Heather Landi, “Healthcare companies’ default risk steadily rising, with most owned by private equity: Moody’s,” Fierce Healthcare, December 12, 2022.

[3] Nick Thomas, “34 healthcare companies at risk of default as debt rises amid weak operating performance: Moody’s,” Becker’s Hospital Review, December 13, 2022.

[4] PESP compiled the list of PE-owned companies through a combination of Moody’s credit ratings for those companies, data provider PitchBook, and new searches. The employee numbers were derived entirely from PitchBook.

[5] Mary Bugbee, “Envision Healthcare: A Private Equity Case Study,” Private Equity Stakeholder Project. December 2022.

[6] Mary Bugbee, “Envision Healthcare: A Private Equity Case Study,” Private Equity Stakeholder Project. December 2022.

[7] The Vistria Group, “The Vistria Group Announces Investment in Help at Home” company press release, November 13, 2020. Accessed December 2022.

[8] Mentor Network/Sevita website, accessed December 2022.

[9] Eileen O’Grady, “The Kids Are Not Alright: How Private Equity Profits Off of Behavioral Health Services for Vulnerable and At-Risk Youth,” Private Equity Stakeholder Project, February 2022.

[10] Sabrina Willmer, “When Wall Street Took Over This Nursing Company, Profits Grew and Patients Suffered,” Bloomberg, October 22, 2019.

[11] “AEA Investors LP Acquires Numotion, the Nation’s Leading Provider of Complex Rehab Technology (CRT),” Numotion press release, Nov, 13, 2018.

[12] Paul Roberts, “Two Behemoths Dominate the Motorized Wheelchair Industry. Disabled Customers Pay the Price.,” Mother Jones, May/June 2022.

[13] Isaac Arnsdorf, “How Rich Investors, Not Doctors, Profit From Marking Up ER Bills,” Propublica, June 12, 2020.

[14] Isaac Arnsdorf, “Overwhelmed Hospitals Face a New Crisis: Staffing Firms Are Cutting Their Doctors’ Hours and Pay,” Propublica, April 3, 2020.

[15] “Air Methods agrees to be taken private in $2.5 billion deal,” Reuters, March 14, 2017.

[16] Loren Adler, Kathleen Hannick and Sobin Lee, “High Air Ambulance Charges Concentrated in Private Equity- Owned Carriers,” USC-BROOKINGS SCHAEFFER ON HEALTH POLICY, October 13, 2020.


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