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AMN Healthcare Set to Acquire B.E. Smith for $160M

AMN Healthcare Services Inc. AHS recently announced the signing of an agreement to acquire global healthcare staffing solutions provider B.E. Smith for $160 million in cash. The acquisition will be funded from the company's term loan borrowings and revolving credit facility. The transaction is expected to be complete in early Jan 2016.

B.E. Smith is reputed for providing leadership candidates for the healthcare sector. The acquisition will surely expand AMH Healthcare's penetration across acute care hospitals, academic medical and children's hospitals, physician practices, and post-acute care providers. The buyout will add approximately $100 million in annual revenues to AMN Healthcare's top line.

B.E. Smith's healthy adjusted EBITDA margin of 15% will also help improve AMN Healthcare's margin position. The transaction will allow AMN Healthcare to achieve tax benefits of net present value of roughly $25 million. The company also expects the acquisition to be immediately accretive to its adjusted earnings per share (EPS).

We believe the acquisition will help AMN Healthcare address the growing client demand for healthcare professionals. In fact, the company's last couple of takeovers were focused on expanding its recruitment capacity and in turn candidate supply.

In early 2015, AMN Healthcare acquired nurse and allied healthcare staffing firm Onward Healthcare (OH), national locum tenens provider Locum Leaders and SaaS-based vendor management system for healthcare facilities provider Medefis.

This September, AMN Healthcare acquired Irvine, CA-based The First String Healthcare - a leading provider of nursing staff. The acquisition strengthened AMN Healthcare's temporary and permanent nursing manpower. It also expanded the company's footprint by adding more than 250 of the nation's top hospitals from The First String Healthcare's client base.

Synergies from these takeovers have driven considerable top-line growth. In the nine months of 2015 ended Sep 30, revenues surged 40.2% year over year to $1.06 billion.

Recently, in October, AMN Healthcare took over Millican Solutions, a physician executive search firm focused on serving academic medical centers and children's hospitals.

We believe that the latest acquisitions will help AMN Healthcare improve traction in the fast growing U.S. temporary staffing market, which is forecasted to value $12 billion by 2016.

The company will continue to benefit from the stable employment scenario in the U.S. and higher demand for clinicians and nurses. Higher attrition rate and increased retirements across most disciplines will also drive overall results in the long haul.

Zacks Rank & Other Key Picks

AMN Healthcare sports a Zacks Rank #1 (Strong Buy).

Air Methods AIRM , INC Research INCR and HealthEquity HQY are other favourably ranked stocks in the healthcare sector that sport the same Zacks Rank as AMN Healthcare.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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