Envision Healthcare could be sold

Envision rises amid report of private equity interest

Envision Healthcare could be sold. See Stockwinners.com for more

Shares of Envision Healthcare (EVHC) are on the rise following a report by Bloomberg claiming the company has attracted buyout interest from private equity investors.

The hospital based physician group, which activist Starboard Value has targeted, had previously announced that it was exploring options to enhance shareholder value.

Meanwhile, Baird analyst Whit Mayo told investors that Envision could be worth in the area of $40 per share in a leveraged buyout, which is an estimated value that his peer at Keybanc also sees as possible.

PRIVATE EQUITY INTEREST

According to a report by Bloomberg, Envision has attracted buyout interest from firms including Carlyle Group (CG) and Onex Corp.

The two are among companies that may bid for Envision alone or as part of a group, the report added.

The health-services provider has been under pressure from activist investor Starboard Value, who revealed a stake in Envision in October and recommended the company as an attractive takeover target, Bloomberg noted.

LBO ‘DOABLE’

In a research note to investors published prior to the release of Bloomberg’s report, Baird‘s Mayo noted that he would guess that about three to four hedge funds now collectively own about 20% of Envision Healthcare, with “potentially more in the shadows,” and that a leveraged buyout is “very doable” if one believes there is an investment case for industry volumes.

If there is a case seen for structural changes in volumes, cash collections and/or physician rate, Mayo sees the potential for “very acceptable returns” on a theoretical leveraged buyout in the $40 per share area, he contended.

#Mayo pointed out that he thinks the upside risk of a leveraged buyout is being “underappreciated,” and reiterated an Outperform rating and $35 price target on the shares.

Meanwhile, KeyBanc analyst Jason #Gurda told investors in a research note of his own that he also believes a private equity buyer could reasonably bid “in the low $40s” for Envision in a leveraged buyout.

The analyst noted that he was not surprised to hear of reports that there is private equity interest in the company as in the past there has been a considerable level of private equity investment in both of Envision’s business segments – physician services and ambulatory surgical centers. Gurda reiterated an Overweight rating on the stock, while raising his price target on the shares to $40 from $37.

PRICE ACTION

In Tuesday’s trading, shares of Envision have jumped about 7% to $27.66. Year-to-date, however, the stock is still down over 56%.


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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

2 Replies to “Envision Healthcare could be sold”

  1. Envision bad management continues to make bad decisions, which in turn has led to poor Physician customer service. Its new integration strategy is to transition all its IT services to a 3rd party in Mexico. Our physicians are leaving and seeking other healthcare providers. Job satisfaction is at its lowest. Q4 and YE financial results will be worse than Q3. I don’t foresee Envision Healthcare to rise from this downfall. An equity firm buying this company is the best solution.

  2. Both the company & the physicians they bill for, are robbed daily by the people they employ in India. Over 90% of billing is done in India. Then wonder why they have so many little fires to put out. Hopefully all those little fires will turn into an inferno & burn it to the ground.

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