NEW YORK (TheStreet) -- AmSurg Corp. (AMSG) said it will pay about $2.35 billion to buy Sheridan Healthcare in a cash and stock deal that adds physician outsourcing services to the ambulatory surgery center operator's portfolio, the Associated Press reports.
Shares of AmSurg are up 12.15% to $48.00 in pre-market trade.
Sheridan Healthcare employs more than 2,400 doctors and provides services to hospitals, ambulatory surgery centers and other locations. That includes anesthesiology, radiology and emergency medicine services. It is owned by the private equity firm Hellman & Friedman, the AP said.
AmSurg Corp. says it plans to issue about $615 million in AmSurg stock to Sheridan equity holders as part of the cash-stock deal. But it may replace most of that with cash before the deal closes in the third quarter.
TheStreet Ratings team rates AMSURG CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMSURG CORP (AMSG) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AMSG's revenue growth trails the industry average of 16.7%. Since the same quarter one year prior, revenues slightly increased by 1.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.75, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, AMSG has a quick ratio of 1.82, which demonstrates the ability of the company to cover short-term liquidity needs.
- AMSURG CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AMSURG CORP increased its bottom line by earning $2.27 versus $1.96 in the prior year. This year, the market expects an improvement in earnings ($2.43 versus $2.27).
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Health Care Providers & Services industry and the overall market, AMSURG CORP's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: AMSG Ratings Report