FPA Medical Management will acquire AHI Healthcare Systems in a stock-for-stock transaction worth approximately $130 million.
FPA's fourth major announced acquisition this year will give the San Diego-based physician practice management company 1997 revenues of about $1 billion.
The merger will combine operations in several states where both companies do business, including California, Texas and Florida. Downey, Calif.-based AHI reported a net loss of $7.6 million, or 52 cents per share, on operating revenues of $30 million in the third quarter ended Sept. 30. That compared with a net loss of $770,000, or 7 cents per share, on revenues of $30 million for the year-ago period.
AHI Chairman and Chief Executive Officer Leonardo A. Berezovsky, M.D., attributed the loss to higher-than-expected medical costs that resulted in lower risk share revenues and a need to increase medical claims reserves.
FPA said it expects to decrease AHI's general and administrative expenses by about $14 million. The transaction is subject to regulatory and stockholder approval and is expected to close in early 1997.
FPA recently completed a merger with Coral Gables, Fla.-based Sterling Healthcare Group in a stock transaction worth $159 million. It also has announced deals to acquire physician operations of two HMOs, Miami-based Physicians Corporation of America and Rancho Cordova, Calif.-based Foundation Health Corp.