Amsurg CEO Chris Holden told analysts Thursday that Envision Healthcare had always been Amsurg's first choice as a major merger partner.
Speaking at the Baird 2016 Global Healthcare Conference, Holden said he and Envision CEO Bill Sanger had preliminary talks more than a year ago, long before Amsurg made an unsuccessful attempt last autumn to merge with rival TeamHealth.
But at the time, Sanger had other priorities, Holden said. So Amsurg moved on to TeamHealth, which rejected a $5 billion merger offer.
That brought Nashville, Tenn.-based Amsurg back to Envision this year, Holden said, culminating in a stock merger valued at about $10 billion that will create the nation's largest physician-staffing company and a giant player in patient transportation and ambulatory surgery centers.
The deal is moving expeditiously through the regulatory process. This week Amsurg and Envision announced that the merger waiting period had expired under the anti-trust Hart-Scott-Rodino Improvements Act of 1976 and the Antitrust Division of the State of Florida Attorney General's office had closed its inquiry into the proposed merger.
Before the reviews, the companies had expressed confidence that the antitrust evaluations would go smoothly given that the businesses are complementary.
Greenwood Village, Colo.-based Envision concentrates on ambulance and emergency room and hospitalist staffing services, while AmSurg is strong in ambulatory surgery centers and specialty physician staffing inside of hospitals.
Some overlap in emergency-room staffing and anesthesia services represents just $200 million in revenue of a combined new company with annual sales of about $8.5 billion.
At the Baird conference, Holden reiterated that the all-stock deal will preserve cash and capital for additional acquisitions.
Amsurg CFO Claire Gulmi told the Baird analysts that the combined company should generate free cash flow of between $600 million and $700 million in 2017. That money will be used for acquisitions, she said.
Holden said that after pitching TeamHealth on a merger, Amsurg was concerned about TeamHealth's debt leverage and the fact that the company did not welcome the offer.
In contrast, the return to Envision was greeted warmly, Holden said. And after a meticulous review by each parties' boards and management, it was determined that together they could cross-sell their services to each other's customers and grow at an even faster rate, he said.