) spiked almost 7% to reach $45.74 on yesterday's close following
the company's announcement of its foray into the huge and
fast-growing fragmented physician outsourcing market through a mega
$2.35 billion acquisition.
The company has entered into a definitive agreement to acquire
Sheridan Healthcare, a prominent multi-specialty outsourced
physician services provider, for a transaction value of $2.35
billion in cash and stock. AmSurg expects completion of this
transaction in the third quarter of 2014 subject to certain
customary closing conditions.
According to AmSurg, Sheridan Healthcare is currently the
topmost provider of anesthesiology services and the second largest
provider of children's services in the U.S. It also holds a strong
position in radiology and emergency medicine services.
AmSurg remains fully optimistic about this impending acquisition
which provides a golden opportunity to drive growth in its own
existing markets and to create a more comprehensive development
pipeline across all service lines. Furthermore, strong fundamentals
and a robust financial profile will allow the combined company to
carry forward its investment in new growth opportunities.
This acquisition is expected to be immediately accretive to
AmSurg's adjusted earnings per share, EBITDA and cash flow, and to
considerably improve the company's top- and bottom-line
Post-acquisition, the combined entity with its unique business
model is expected to pose a major challenge in the competitive
niche by covering 38 states and establishing its hold on a total
addressable market of as large as $70 billion. It is also expected
to improve the company's response to emerging market trends.
We are also optimistic about the company's newly formed joint
venture with a hospital system and expect AmSurg to successfully
take forward its acquisition pipeline, supported by a strong cash
position. Government agencies have undertaken initiatives to
curtail healthcare expenditure, thereby resulting in a shift toward
ambulatory surgery centers from admission to traditional hospitals.
However, we are concerned with the continued sluggish same-center
Currently, AmSurg retains a Zacks Rank #3 (Hold).
Other Stocks to Consider
Some better-ranked stocks that warrant a look in the similar
Almost Family Inc.
). While AFAM sports a Zacks Rank #1 (Strong Buy), AMED and RDNT
carry a Zacks Rank #2 (Buy).
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