TeamHealth Holdings (TMH) to Acquire IPC Healthcare (IPCM) in ~$1.6B Deal
TeamHealth Holdings (NYSE: TMH) announced a definitive agreement to acquire IPC Healthcare Inc. ("IPC Healthcare") (Nasdaq: IPCM), a leading national acute hospitalist and post-acute provider organization, in an all-cash transaction with an enterprise value of approximately $1.6 billion or $80.25 per share. The boards of directors of both companies have approved the transaction.
"We are excited to announce this strategic transaction with IPC Healthcare to create the leading physician services organization spanning multiple specialties," said TeamHealth President and Chief Executive Officer, Mike Snow. "Through this combination, TeamHealth will be better positioned to capitalize on key trends as the U.S. healthcare industry moves toward value based reimbursement with an increased focus on post-acute care and services. Together with IPC Healthcare, we will create an industry leader in the hospital based and post-acute settings with an expanded network of services and solutions that will better support TeamHealth's affiliated clinicians and hospital partners and drive long-term shareholder value."
Mr. Snow continued, "We believe this combination, which will be accretive to TeamHealth's earnings, will result in an enhanced financial profile, allowing for strong cash flows and deleveraging, along with ongoing financial flexibility to fund future growth. This transaction ensures that we extend TeamHealth's competitive position, and we are confident that together we will create a more powerful platform from which to deliver significant value creation for our patients, physicians and other stakeholders."
"This agreement provides an immediate cash premium to our shareholders, and we look forward to partnering with TeamHealth to advance our mission of delivering high-quality inpatient care efficiently and cost-effectively," said IPC Healthcare Chief Executive Officer, Adam Singer. "Both TeamHealth and IPC Healthcare are physician centric organizations with strong track records of delivering superior solutions to our healthcare provider partners nationwide. We look forward to being a critical contributor to the future growth strategy and value creation for TeamHealth while creating new and exciting opportunities for our valued employees."
Strategic and Financial Benefits of the Transaction
- Combines Two Physician Centric Companies to Create the Leading Physician Services Organization: The addition of IPC Healthcare's service network will increase TeamHealth's reach and strengthen its presence to create the leading physician organization spanning multiple specialties. With 15,000 healthcare professionals nationwide, the combined company will have a powerful capability to manage patient care and influence high quality and lower cost outcomes across the continuum of care.
- Establishes a Leadership Position in the Large and Increasingly Strategic Post-Acute Setting: The post-acute setting represents one of the most impactable, yet expensive parts of healthcare delivery and IPC healthcare has the leading national platform, providing services in approximately 2,000 post-acute facilities across 28 states. This presents a substantial growth opportunity in a very large segment of the industry and makes TeamHealth the natural acquirer of post-acute focused practices reflecting IPC Healthcare's robust acquisition pipeline.
- Creates Attractive Growth Opportunities by Combining Highly Synergistic Emergency Medicine and Hospital Medicine Capabilities: Combining emergency department staffing with hospitalist presence creates the opportunity to effectively manage patients from the emergency department through the inpatient discharge and beyond. This will allow TeamHealth to lower costs and increase quality, and, as a result, drive better patient experiences.
- Effectively Positions TeamHealth to Capitalize on the Migration to Value Based Payments: The BPCI initiative underscores the growing opportunity for providers who can effectively manage care both inside the hospital setting and beyond, and the combined company will have a unique presence across emergency medicine, hospitalist and post-acute services. Select TeamHealth and IPC Healthcare provider groups began participation in phase II of the BPCI program effective July 1, 2015, leveraging state-of-the-art proprietary technology and infrastructure and post-acute expertise to manage a combined $2 billion of Medicare spend and drive a significant savings opportunity in this fast growing initiative.
- Stronger and More Diverse Strategic Position for TeamHealth: Following the close of the transaction, TeamHealth expects to have a stronger and more diverse strategic position with financial flexibility to accelerate growth opportunities. The transaction is expected to be accretive to 2016 Adjusted EPS and is expected to enhance TeamHealth's revenue and EBITDA growth profile. The combination of TeamHealth's and IPC Healthcare's robust cash flow profiles is expected to drive deleveraging, with a target of low 4x by the end of 2016, and create significant capacity to continue to grow the business through TeamHealth's disciplined acquisition strategy.
- Meaningful Synergy Opportunity: Given strong operational overlap, TeamHealth expects to realize at least $60 million of combined cost and identified revenue synergies to be achieved within three years.
ApprovalsThe transaction, which is expected to close during the fourth quarter of 2015, is subject to regulatory approval and customary closing conditions.
AdvisorsCiti is serving as financial advisor to TeamHealth and is providing the committed financing in connection with the transaction. MTS Health Partners, L.P. is also serving as financial advisor to TeamHealth. Simpson Thacher & Bartlett LLP is serving as TeamHealth's legal counsel. Credit Suisse is serving as lead financial advisor to IPC Healthcare and Evercore provided a fairness opinion. Sidley Austin LLP is serving as IPC Healthcare's legal counsel.
Conference Call and WebcastThe Company today also announced its second quarter 2015 earnings results in a separately issued press release. The TeamHealth and IPC Healthcare management teams will discuss the transaction on TeamHealth's second quarter 2015 earnings conference call, which will be held at 9:00 a.m. (Eastern Time). The conference call can be accessed live over the phone by dialing 1-866-610-1072, or for international callers, 1-973-935-2840. A replay will be available two hours after the call and can be accessed by dialing 1-855-859-2056, or for international callers, 1-404-537-3406. The passcode for the live call and the replay is 4570732. The replay will be available until August 11, 2015.
Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the Investor Relations section of the Company's website at www.teamhealth.com. The on-line replay will be available for a limited time beginning immediately following the call.
To learn more about TeamHealth, please visit the company's website at www.teamhealth.com. TeamHealth uses its Website as a channel of distribution of material Company information. Financial and other material information regarding TeamHealth is routinely posted on the Company's Website and is readily accessible.