Expected to be Accretive to Envision and AMSURG
Adjusted Earnings per Share in 2017 and Achieve Synergies of $100
Million
Envision Healthcare Holdings, Inc. (Envision) (NYSE:EVHC) and
AMSURG Corp. (AMSURG) (NASDAQ:AMSG) today announced that they have
signed a definitive merger agreement pursuant to which the
companies will combine in an all-stock transaction at a fixed
exchange ratio of 0.334 AMSURG shares per Envision share. The
combined organization will have a pro forma market capitalization
of approximately $10 billion and enterprise value of approximately
$15 billion based on the closing stock prices of Envision and
AMSURG on June 14, 2016. Envision shareholders will own
approximately 53% percent and AMSURG shareholders will own
approximately 47% percent of the combined organization on a fully
diluted basis, including preferred shares. The transaction has been
unanimously approved by the Boards of Directors of both
companies.
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Upon completion of the merger, which is expected to be tax-free
to the shareholders of both organizations, the combined company
will be named Envision Healthcare Corporation and co-headquartered
in Nashville, Tennessee and Greenwood Village, Colorado. The
Company’s common stock is expected to trade on the New York Stock
Exchange under the ticker symbol: EVHC.
The combination of Envision and AMSURG brings together two
leading, complementary healthcare companies to form one of the
nation’s largest provider organizations, well positioned to help
shape the future of healthcare delivery. Together, the companies
manage a broad continuum of clinical network solutions, including
outsourced physician services in the following specialties:
emergency, hospitalist, anesthesia, radiology and children’s
services. In addition, the companies provide solutions for
ambulatory surgery, post-acute care and medical transportation. The
two companies had combined revenue of more than $8.5 billion and
Adjusted EBITDA of more than $1.1 billion for the 12 months ended
March 31, 2016.
Upon closing of the transaction, William A. Sanger, who serves
currently as President, Chief Executive Officer and Chairman of the
Board of Envision, will be Executive Chairman of the Board.
Christopher A. Holden will be President and Chief Executive Officer
of the combined company, the same positions he holds at AMSURG.
Claire Gulmi, AMSURG’s Chief Financial Officer, will retain that
role at the combined company; Randy Owen, Envision’s Chief
Financial Officer and Chief Operating Officer, will serve as
President of Ambulatory Services at the combined company; and
Robert Coward, current President of Sheridan and Chief Development
Officer of AMSURG, will serve as President of Physician services.
The newly formed Board will consist of 14 directors, comprised of
equal numbers of current Envision and AMSURG directors, including
Mr. Sanger and Mr. Holden.
Mr. Sanger said, “At Envision, we have been actively advancing
our integrated delivery and market-centric strategies while AMSURG
has been diversifying and building its national presence. Our two
organizations complement each other in a way few others could, and
this merger will accelerate our collective ability to positively
impact healthcare delivery across the country. We are excited for
the future and look forward to the opportunity to combine the
resources of Envision and AMSURG.”
Mr. Holden added, “This merger will create a national platform
with a highly differentiated suite of solutions. It will
significantly increase our ability to empower physicians and expand
our client relationships. Within a highly fragmented marketplace,
we will have the critical first mover advantage to capitalize on
the greenfield and cross-selling opportunities across our various
offerings, and generate significant value for our
shareholders.”
Compelling Strategic and Financial Rationale
- Compelling client proposition with
differentiated service offerings: The combined organization
will have complementary strengths as a physician-led,
patient-focused healthcare services organization with a broad
national footprint. The Company’s platform of differentiated
service offerings will span from pre-hospital, acute and outpatient
care to post-acute care.
- Well positioned for evolving
healthcare environment: As a leader in each of its
sub-specialties, the combined organization will be able to use its
expansive network to improve patient outcomes and experiences while
creating efficiencies through more effective care
coordination.
- Strong financial
profile: The combined company will have a strong balance
sheet with anticipated Net Debt to Adjusted EBITDA at closing of
4.2x, including estimated contributions from recent acquisitions
and estimated synergies. The Company will have a diversified
business mix across verticals, geographies and clients, as well as
significant cash-flow generation expected to be deployed for
acquisitions, further driving growth while also reducing net
leverage.
- Meaningful synergy
opportunities: The combination is expected to result in $100
million of synergies, anticipated to be fully realized within three
years of closing. Synergies are expected to be derived through cost
savings as well as meaningful revenue synergies from an enhanced
portfolio and cross-selling opportunities.
- Experienced, accomplished management
team: The management team has a proven track record of building
organizations for the changing healthcare environment and growth
through both acquisitions and sales.
- Significant accretion: The
transaction is expected to be accretive to the two companies’
combined adjusted earnings per share in 2017 and double-digit
accretive in 2018.
Additional Transaction Details
JPMorgan Chase Bank and Barclays have provided committed
financing for the transaction. The transaction is expected to close
by year-end 2016, subject to regulatory approvals, approval by
Envision and AMSURG shareholders and the satisfaction or waiver of
customary closing conditions.
Advisors
Barclays is acting as lead financial advisor to Envision, with
Evercore also acting as financial advisor and Debevoise &
Plimpton LLP acting as its legal counsel. Guggenheim Securities and
J.P. Morgan Securities LLC are acting as financial advisors for
AMSURG and Bass, Berry & Sims PLC is acting as its legal
counsel.
Conference Call and Webcast Details
Envision and AMSURG will hold a conference call Thursday, June
16, at 8:30 a.m. Eastern Time. The dial-in number is (888) 312-3055
(toll-free), Conference Code 4584718. Presentation materials
related to the conference call will be available on both companies’
websites at www.evhc.net and www.amsurg.com, by following the links
to “Investors.” A telephonic replay of the conference call will be
available through 11:30 a.m. ET on June 23, 2016, by dialing (888)
203-1112 (toll-free) or (719) 457-0820 (toll) and entering Passcode
4584718. Investors will also have the opportunity to listen to the
conference call over the Internet by going to either company’s
website and following the link to “Investors” at least 15 minutes
early to register, download, and install any necessary audio
software. For those who cannot listen to the live broadcast, a
replay will be available at these sites shortly after the call and
continue for 30 days.
About Envision Healthcare Holdings
Envision Healthcare Holdings, Inc., offers an array of
physician-led healthcare-related services to consumers, hospitals,
healthcare systems, health plans and local, state and national
government entities. The organization provides care across a broad
patient continuum via American Medical Response, Inc. (AMR), EmCare
Holdings, Inc. (EmCare) and Evolution Health, LLC (Evolution
Health). AMR provides community-based medical transportation
services, including emergency (‘911’), non-emergency, managed
transportation, air ambulance and disaster response. EmCare’s
integrated facility-based physician services include emergency,
anesthesiology, hospitalist/inpatient care, intensive medicine,
obstetrics and gynecology, radiology, tele-radiology and surgery.
Evolution Health’s innovative and comprehensive care coordination
solutions result in improved patient care delivery across a number
of healthcare settings. Envision Healthcare is headquartered in
Greenwood Village, Colorado. For additional information,
visit www.evhc.net.
About AMSURG
AMSURG’s Ambulatory Services Division acquires,
develops and operates ambulatory surgery centers in partnership
with physicians throughout the U.S. AMSURG’s Physician
Services Division, Sheridan, provides outsourced physician services
in multiple specialties to hospitals, ASCs and other healthcare
facilities throughout the U.S., primarily in the areas of
anesthesiology, radiology, children’s services and emergency
medicine. Through these businesses as of March 31,
2016, AMSURG owned and operated 256 ASCs and one surgical
hospital in 34 states and the District of Columbia and
provided physician services to more than 450 healthcare facilities
in 29 states. AMSURG has partnerships with, or employs,
over 5,000 physicians and other healthcare professionals in 38
states and the District of Columbia.
No Offer or Solicitation / Additional Information and Where
to Find It
This communication is for informational purposes only and does
not constitute an offer to sell or the solicitation of an offer to
buy any securities or a solicitation of any vote or approval with
respect to the proposed business combination between Envision
Healthcare Holdings, Inc. (“Envision”) and AMSURG Corp. (“AMSURG”)
or otherwise, nor shall there be any sale, issuance or transfer of
securities in any jurisdiction in contravention of applicable law.
No offer of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended. The proposed business combination between
Envision and AMSURG will be submitted to their respective
shareholders for consideration. AMSURG will cause its newly formed,
wholly owned subsidiary, New Amethyst Corp. (“New Amethyst”), to
file with the Securities and Exchange Commission (the “SEC”) a
Registration Statement on Form S-4 that will constitute a
prospectus of New Amethyst and a joint proxy statement of Envision
and AMSURG. Envision and AMSURG will deliver the joint proxy
statement/prospectus to their respective shareholders as required
by applicable law. This communication is not a substitute for any
prospectus, proxy statement or any other document that may be filed
with the SEC in connection with the proposed business combination.
Investors and shareholders are urged to read carefully and in their
entirety the joint proxy statement/prospectus and any other
relevant documents that will be filed with the SEC when they become
available because they will contain important information about the
proposed business combination and related matters. Investors and
shareholders will be able to obtain free copies of the joint proxy
statement/prospectus and other documents containing important
information about Envision, AMSURG and New Amethyst, once such
documents are filed with the SEC, through the website maintained by
the SEC at www.sec.gov. Envision and AMSURG make available
free of charge at www.evhc.net and www.amsurg.com,
respectively (in the “Investors” section), copies of materials they
file with, or furnish to, the SEC.
Participants in the Merger Solicitation
Envision, AMSURG and certain of their respective directors,
executive officers and other members of management and employees
may be deemed to be participants in the solicitation of proxies
from the shareholders of Envision and AMSURG in connection with the
proposed business combination. Information about the directors and
executive officers of Envision is set forth in its proxy statement
for its 2016 annual meeting of shareholders filed with the SEC on
March 23, 2016. Information about the directors and executive
officers of AMSURG is set forth in its proxy statement for its 2016
annual meeting of shareholders filed with the SEC on April 22, 2016
and its Annual Report on Form 10-K for the year ended December 31,
2015 filed with the SEC on February 25, 2016. These documents can
be obtained free of charge from the sources indicated above. Other
information regarding those persons who are, under the rules of the
SEC, participants in the proxy solicitation and a description of
their direct and indirect interests, by security holdings or
otherwise, will be contained in the joint proxy
statement/prospectus and other relevant materials to be filed with
the SEC when they become available.
Forward-Looking Statements
Certain statements and information in this press release may be
deemed to be “forward-looking statements” within the meaning of the
Federal Private Securities Litigation Reform Act of 1995.
Forward-looking statements may include, but are not limited to,
statements relating to Envision’s and AMSURG’s objectives, plans
and strategies, and all statements (other than statements of
historical facts) that address activities, events or developments
that Envision and AMSURG intend, expect, project, believe or
anticipate will or may occur in the future. These statements are
often characterized by terminology such as “believe,” “hope,”
“may,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,”
“estimate,” “project,” “positioned,” “strategy” and similar
expressions, and are based on assumptions and assessments made by
Envision’s and AMSURG’s management in light of their experience and
their perception of historical trends, current conditions, expected
future developments, and other factors they believe to be
appropriate. Any forward-looking statements in this press release
are made as of the date hereof, and Envision and AMSURG undertake
no duty to update or revise any such statements, whether as a
result of new information, future events or otherwise.
Forward-looking statements are not guarantees of future
performance. Whether actual results will conform to expectations
and predictions is subject to known and unknown risks and
uncertainties, including: (i) risks and uncertainties discussed in
the reports that Envision and AMSURG have filed with the SEC; (ii)
general economic, market, or business conditions; (iii) risks
associated with the ability to consummate the business combination
between Envision and AMSURG and the timing of the closing of the
business combination; (iv) the ability to successfully integrate
Envision’s and AMSURG’s operations and employees; (v) the ability
to realize anticipated benefits and synergies of the business
combination; (vi) the potential impact of announcement of the
business combination or consummation of the transaction on
relationships, including with employees, customers and competitors;
and (vii) other circumstances beyond Envision’s and AMSURG’s
control. Refer to the section entitled “Risk Factors” in Envision’s
and AMSURG’s annual and quarterly reports for a discussion of
important factors that could cause actual results, developments and
business decisions to differ materially from forward-looking
statements.
Non-GAAP Financial Information
This press release includes certain financial measures that were
not prepared in accordance with U.S. generally accepted accounting
principles (“GAAP”), including Adjusted EBITDA, Pro Forma Net Debt
and Adjusted Earnings per Share. The items excluded from these
non-GAAP measures are important in understanding Envision’s and
AMSURG’s financial performance, and any non-GAAP measures presented
should not be considered in isolation of, or as an alternative to,
GAAP financial measures. Since these non-GAAP financial measures
are not measures determined in accordance with GAAP, have no
standardized meaning prescribed by GAAP and are susceptible to
varying calculations, these measures, as presented, may not be
comparable to other similarly titled measures of other
companies.
Adjusted EBITDA of Envision is defined as net income (loss)
before equity in earnings of unconsolidated subsidiary, income tax
benefit (expense), loss on early debt extinguishment, other income
(expense), net, realized gains (losses) on investments, interest
expense, net, equity-based compensation expense, transaction costs
related to acquisition activities, restructuring and other charges,
adjustment to net loss (income) attributable to non-controlling
interest due to deferred taxes, and depreciation and amortization
expense. Adjusted EBITDA of AMSURG is defined as earnings before
interest expense, net, income taxes, depreciation, amortization,
share-based compensation, transaction costs, changes in contingent
purchase price consideration, gain or loss on deconsolidations and
discontinued operations. Except for purposes of calculating
leverage ratios, Adjusted EBITDA from acquisitions prior to the
date such acquisitions were completed are not included in Adjusted
EBITDA for either Envision or AMSURG. Pro Forma Net Debt for
Envision and AMSURG is defined as long-term debt and capital lease
obligations less cash and cash-equivalents. Adjusted Earnings per
Share is defined as diluted earnings per share adjusted for
amortization expense, equity-based compensation expense,
restructuring and other charges, severance and related costs, loss
on early debt extinguishment and transaction costs related to
acquisition activities, net of estimated tax benefit.
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version on businesswire.com: http://www.businesswire.com/news/home/20160615006526/en/
EnvisionInvestors:Bob Kneeley,
303-495-1245Bob.kneeley@evhc.netorMedia:Sard Verbinnen &
CoDavid Millar/Andrew Duberstein/Nikki
Ritchie212-687-8080Envision-SVC@sardverb.comorAMSURGInvestors:Claire
M. Gulmi, 615-665-1283orMedia:Sard Verbinnen & CoJared
Levy/Jacob Crows/Pat Scanlan212-687-8080AMSURG-SVC@sardverb.com
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