AmSurg and Envision Healthcare are eyeing physician practices to acquire even as they prepare for their own mega-merger.
Nashville-based AmSurg bought four anesthesiology practices in the second quarter and a radiology practice to expand its offerings to hospitals and capitalize on physician practices wanting to sell, CEO Chris Holden said this week during a second-quarter earnings call with analysts.
AmSurg also bought four ambulatory surgery centers in the first half.
“Our pipeline remains very solid in both services,” Holden said while announcing increased revenue and earnings in the second quarter.
Envision, which saw an increase in adjusted EBITDA and revenue in the second quarter, is eyeing acquisitions as well, CEO Bill Sanger said in a separate earnings call with analysts.
Sanger said there are at least a half-dozen physician groups in Envision's preferred size of 100 to 300 physicians that are actively for sale.
And while Envision is concentrating on completing its merger with AmSurg and strengthening other recent acquisitions, the physician-staffing and ambulance service company is entertaining new acquisitions, Sanger said.
Physician groups that have remained independent are facing intense pressures to put in new information technology systems and business practices to get fully paid under impending federal reimbursement changes that will reward or punish physicians for the quality of their work, Sanger said.
In response, both AmSurg and Envision have built data units to help them prove their performance to payers, he said.
“There continues to be quite a few opportunities as it relates to M&A on all hospital-based services,” Sanger said.
He added that the larger physician practices are fetching prices of 9-11 times adjusted EBITDA.
AmSurg and Greenwood, Colo.-based Envision announced in June that they would merge to create the nation's largest physician-staffing company with combined revenue of more than $8.5 billion and an enterprise value of all assets of $15 billion.
The deal is an all-stock transaction, in large part to preserve cash for future acquisitions and growth.
In its second quarter, Envision posted adjusted EBITDA of $172 million on revenue of $1.64 billion compared with adjusted EBITDA of $162.8 million on revenue of $1.35 billion in the year-earlier quarter.
AmSurg in the second quarter reported that adjusted EBITDA climbed 17% in the quarter year over year to $149.2 million on a revenue increase of 18% to $758.5 million from $642 million in the year-earlier quarter.