Private equity-backed Envision Healthcare is struggling to deal with the dramatic loss of revenues.

Patients have turned to telehealth resources and canceled ambulatory surgeries. Envision provides medical staff to hospitals and operates surgery centers and its owner is KKR (NYSE: KKR). The company has seen its business drop by about 70% in a very short period of time. More than 90 of its centers closed due to the spread of coronavirus.

What Happens Next for Envision Healthcare?

Envision has withheld performance-based checks that are owed based on 2019 performance levels form its doctors.

The contracts for doctors include base pay and performance-based incentive compensation. The firm withheld pay indefinitely as it deals with the slowdown due to the government’s “stay at home” guidelines. They intend to pay at some future point when their finances have strengthened.

The company has also cut executive compensation by 50% and may cut base pay for medical personnel including doctor if matters worsen

The bond market is not very confident about Envision’s future.

KKR financed the buyout with debt, and the company now has about $7 billion of debt on its balance sheets compared to just $425 million of unrestricted cash. Debt payments of $140 million to $150 million are due this month. Those payments will further reduce the amount of cash on hand. Envision Healthcare bonds that traded near par a year ago have dropped as much as 75% after the company saw cash flow go negative over the past month.

Envision Healthcare officials have said they will need additional financing if the situation gets worse in the next few months.

That may be difficult under current conditions in the financial markets.

KKR had no comment on the difficulties at its portfolio company.

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