Though the $10 billion, all-stock merger between physician-staffing giants AmSurg and Envision Healthcare has cleared several antitrust hurdles, the marriage has yet to receive the full blessing of Wall Street.
The stock price of Envision is down 19% since closing at $27.51 on June 15, the day its merger with AmSurg was officially announced. The stock closed Friday at $22.27.
Nashville, Tenn.-based AmSurg is faring slightly better, but still down since the announcement. Its shares closed Friday at $67.05, down 13% from its June 15 close of $77.50.
Part of the issue is that healthcare provider stocks have been in the doldrums for most of the year, really since last autumn when patient volumes began to flatten from new healthcare exchange enrollments under the Affordable Care Act, analysts said.
Envision, specifically, missed earnings guidance when the Greenwood Village, Colo.-based company released its second-quarter financial results Aug. 3.
In a note to investors after the miss, RBC Capital Markets analyst Frank Morgan said the wobble was largely limited to short-term additional costs associated with an ambulance company Envision had acquired and a Blues contract in Florida that enlisted Envision subsidiary Evolution and is just starting to generate cost savings.
Morgan stressed that the smaller issues did not detract from his optimism surrounding the blockbuster AmSurg and Envision merger. Nonetheless, Envision in the quarter posted an adjusted earnings per share of 34 cents vs. a consensus expectation of 36 cents.
During recent conferences with analysts that were web cast, AmSurg CEO Chris Holden and Envision CEO Bill Sanger separately noted that the merger was on track.
The deal creates the nation's largest physician staffing company with combined annual revenue of about $8.5 billion. Physician staffing firms provide contracted doctors to run hospital departments such as the emergency room, anesthesiology and hospitalists or internists who see patients during their stays.
Envision also has one of the country's largest ambulance companies, while AmSurg is a leader in freestanding ambulatory surgery centers.
Holden and Sanger touted the opportunity gained to cross-sell the various services in which they specialize. Envision, for example, is strong in emergency room staffing and hospitalists, while AmSurg, through its Sheridan subsidiary, is a national leader in specialty physician services such as anesthesiology and radiology.
The CEOs also said the deal was all-stock, with no premium for shareholders, so the combined company could conserve cash for acquisitions.
The complementary nature of their businesses has made for smooth sailing so far through a federal anti-trust approval process.
Earlier this month, 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.