TeamHealth Holdings will look for select acquisitions of physician groups in 2016, mostly in the post-acute setting, after swallowing giant IPC late last year.
Knoxville, Tenn.-based TeamHealth bought IPC in November in a deal valued at $1.6 billion.
During a fourth-quarter earnings call with analysts Tuesday, CEO Mike Snow said TeamHealth would concentrate on integrating IPC, which can help bring opportunities for bundled contracts with payers.
IPC is strong in post-acute facilities, while TeamHealth is a leader in providing emergency room physicians and hospitalists to hospitals.
Snow said investor-owned TeamHealth expects to achieve $25 million in back-office and other synergies from the IPC merger in 2016 and a total of $60 million over three years.
“As we move into 2016, we remain focused on the enhancement of IPC's financial performance, the integration of our combined operations, and the achievement of our cost and revenue synergy targets,” Snow said.
IPC's profit margins are running about 7%, less than the 11% that TeamHealth has carried. Snow said he expects IPC's margin to continue to lag behind TeamHealth this year.
But those are expected to rise as IPC is fully integrated, he said. Moreover, IPC allows TeamHealth to bid physician-staffing business across hospitals as well as now post-acute care.
That's becoming increasingly important as the CMS and managed-care companies contract for care as a bundle, putting providers at risk for preventing readmissions and unnecessary care that can drive up costs, he said.
In the fourth quarter, TeamHealth posted a net loss of $9.7 million, or 13 cents per shares, compared with net income of $16.1 million, or 22 cents, in the year-earlier fourth quarter. TeamHealth earned $45.2 million, or 61 cents, in the 2015 fourth quarter excluding one-time charges of $49.1 million for transaction and integration costs of the IPC acquisition and other smaller items.
Revenue in the fourth quarter increased 23.9% to $979.6 million from $790.7 million in the same period of 2014.
In full-year 2015, TeamHealth posted net income of $82.7 million, or $1.15 per share, compared with $97.7 million, or $1.39, in 2014. Revenue in 2015 was $3.56 billion vs. $2.82 billion in 2014.
