KKR completes Envision acquisition

(Updated at 3:55 p.m. ET)

Private equity firm KKR has completed its acquisition of Envision Healthcare Corp., the companies said Thursday, exactly four months after the deal was announced.

Nashville-based physician services provider Envision is now a wholly owned subsidiary of KKR, and Envision's stockholders will receive $46 per share of Envision common stock in cash. As a result of the deal's completion, Envision's common stock stopped trading on the New York Stock Exchange prior to Thursday's open.

The deal was valued at $9.9 billion in cash and assumed debt. Bob Kneeley, Envision's senior vice president of government affairs and investor relations, said the Federal Trade Commission terminated its review of the deal early, allowing it to proceed without disruption. State regulators also signed off on the deal.

Becoming a part of KKR's portfolio executes on the strategy Envision set back in 2016 when it merged with Nashville-based AmSurg to create the country's largest physician services company, with more than 25,000 clinicians working in more than 900 hospitals, Kneeley said.

"We think we're providing a vital service, managing a very rare resource, which is physician talent within our specialties, with hospital relationships," Kneeley said. "There's a very high demand for those services and we think we've created an environment where they can practice medicine. Nothing changes on that point."

A KKR spokeswoman declined to comment for this article.

The deal's announcement in June followed Envision's strategic review designed to enhance shareholder value late last year. Envision's board contacted 25 potential buyers for all or parts of the company, and determined KKR's proposal offered the best value.

Envision, which draws $7.8 billion in total revenue, has been embroiled in a longstanding feud with UnitedHealth Group, which Envision argues is trying to shift the payment burden onto members. UnitedHealth says Envision charges too much for services. UnitedHealth comprises $1 billion of Envision's commercial revenue, Envision's CEO, Chris Holden, told Modern Healthcare in a meeting last week. Kneeley said Thursday he had no update to share on that front.

Holden said last week that going private protects the company from the sensitivities of Wall Street analysts, who tend not to appreciate the company's transformational moves when they don't result in short-term payoff, such as reengineering a revenue cycle or changing out a payroll platform.

"It gives you a much longer view," he said.

KKR, by contrast, has other healthcare companies in its portfolio and understands the complexities of subjects like managed care and physician staffing models.

"They're one of the preeminent investors in healthcare today," Holden said. "I think they recognized this is just a great launching platform. It's better suited for the private market, especially as we execute on our managed care strategy, as we continue to execute on our operational improvements."