Amsurg acquires Sheridan Healthcare in transaction valued at $2.35 Billion

Ambulatory surgery center operator Amsurg Corp., Nashville, Tennessee, is making a big play to expand into the fast-growing physician outsourcing market with its purchase of Sheridan Healthcare based in Sunrise, Florida.

According to Amsurg, its acquisition of Sheridan will be funded with financing from Citi. Sheridan equity holders will be compensated with cash and Amsurg stock. The transaction will be around the $2.35 billion mark depending on the companies’ share values at the time the deal is completed, which should be sometime in the third quarter of the 2014 fiscal year. The combined company will include more than 4,600 physician relationships in 38 states and will have a total addressable market of approximately $70 billion.

“This will be a combination unlike any other in the marketplace today,” promised Christopher A. Holden, president and chief executive officer of Amsurg Corp. in the press release. “The breadth of our value-added services will position us to compete for new outsourced physician contracts, health system partnerships and payer relationships. It will allow us to collaborate with our [ambulatory surgery center] physician partners to pursue the efficient and natural integration of surgery with anesthesia. It also bolsters our internal competencies thereby improving our response to emerging market trends that touch physician engagement models, payment model reform and new care delivery innovation."

Amsurg owns or operates 242 ambulatory surgery centers across the United States and is currently valued at around $615 million. The acquisition of Sheridan means taking on debt but it also helps it become more diversified by letting it enter the physician outsourcing market already a leader in the fields of anesthesia, children's services, emergency medicine services and radiology.

Strategic and financial advantages Amsurg stressed to its investors included:

• More business, geographic and payor diversity.
• More opportunities to engage with physicians, health systems and payors.
• Vertical integration of anesthesia within the existing ambulatory surgery center business.

• More revenue and better earnings per share.
• Robust free cash flow to support future growth and pay off loans.