AmSurg plans to pay more than $2.3 billion for a Florida-based company that provides anesthesia and other specialty services to more than 300 facilities in 25 states. The cash-and-stock deal for Sheridan Healthcare will double the company's annual revenue to $2.2 billion and its adjusted EBITDA to $380 million.
Sheridan, which is owned by private-equity firm Hellman & Friedman, gets about two-thirds of its revenues from anesthesiology services, where it is the largest player in the country. In addition, the 52-year-old company also markets children's services, hospital-based radiology and emergency medicine services. Since 2010, Sheridan has grown revenues from $684 million to about $1.1 billion over the past 12 months, thanks both to almost 20 acquisitions (worth about $480 million) and almost 30 new contract wins.
"This will be a combination unlike any other in the marketplace today," AmSurg President and CEO Chris Holden said in a statement. "The breadth of our value-added services will position us to compete for new outsourced physician contracts, health system partnerships and payer relationships. It will allow us to collaborate with our ASC physician partners to pursue the efficient and natural integration of surgery with anesthesia. It also bolsters our internal competencies thereby improving our response to emerging market trends that touch physician engagement models, payment model reform and new care delivery innovation."
Holden told analysts and investors on a call Thursday morning that the upheaval in the health care sector — think of the building of integrated health networks, bundled pricing and the trend toward facilities owning their physicians — today has created the opportunity to grow a combined AmSurg-Sheridan faster than the industry as a whole. The merged organization will have a presence in more than 100 markets and take Sheridan into 13 new states. (See map below and view the companies' investor presentation here.)
"Anesthesiology and surgery go hand in glove," said Sheridan CEO John Carlyle, whose team employs more than 2,400 doctors and other medical professionals. "We are extremely excited about our growth opportunities as a combined company."
Carlyle and other senior Sheridan executives will stay with the combined organization for at least several quarters as the two companies integrate their operations and take aim at building their business, which now is active at more than 540 locations in 38 states.
"Strategic diversification has always served us well," Holden said, pointing out that AmSurg has since 2007 expanded into multi-specialty surgery centers and that AmSurg-Sheridan can grow annual revenues by up to 13 percent annually through a combination of acquisitions and organic growth.
Shares of AmSurg (Ticker: AMSG) were up more than 5 percent to $45.00 in pre-market trading. Year to date, they're down slightly but are have risen about 20 percent over the past 12 months.
Citi is serving as financial advisor to AmSurg on this deal and a team of 18 Bass Berry & Sims attorneys led by Jim Jenkins has been providing legal counsel.
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