Revised Proposal Offers an Additional $4.00
per TeamHealth Share in Cash
Urges TeamHealth Board to Engage; Offer to
be Withdrawn on Tuesday, November 3, at 4pm ET
AmSurg Corp. (Nasdaq:AMSG) today announced that it has revised
its proposal to combine with Team Health Holdings, Inc. (NYSE: TMH)
to provide an additional $4.00 in cash per TeamHealth share. The
revised proposal is 0.768 AmSurg shares plus $15.49 in cash for
each TeamHealth share. The proposal has a total current value of
$69.32 per TeamHealth share, or a total enterprise value of $7.6
billion, based on AmSurg’s closing stock price Friday, October 30.
AmSurg first made this proposal to the Board of Directors of
TeamHealth on October 24, 2015. If TeamHealth does not engage with
AmSurg by 4pm ET on Tuesday, November 3, the proposal will be
withdrawn.
Christopher A. Holden, President and Chief Executive Officer of
AmSurg, said, “We continue to believe the proposed combination is a
compelling opportunity that offers significant value to both our
shareholders. After meeting with the majority of both companies’
shareholders over the past two weeks, it is clear that they are
supportive of the proposed merger and agree that the time to move
forward with this combination is now. We hope the TeamHealth Board
will give this bold opportunity the serious consideration it
deserves and will take into account input from TeamHealth
shareholders. We look forward to engaging with the TeamHealth Board
promptly.”
AmSurg Today sent the following letter to the TeamHealth Board
of Directors:
November 2, 2015
Board of DirectorsTeam Health Holdings,
Inc.265 Brookview Centre Way, Ste. 400Knoxville, TN 37919c/o Lynn
Massingale, Chairman & Mike Snow, Chief Executive Officer
Dear Lynn & Mike:
This letter is in response to our telephone
conversation on Friday, October 30th, during which you relayed that
the Board of Directors of TeamHealth has rejected our revised
proposal of 0.768 AmSurg shares plus $15.49 in cash for each
TeamHealth share. Our revised proposal represents an additional
$4.00 in cash per TeamHealth share over and above our original
proposal on October 12, 2015. As we have discussed, the additional
$4.00 per share included in our revised proposal is not contingent
on TeamHealth taking the necessary steps to eliminate or mitigate
the potential prepayment penalties associated with the financing
for the IPC transaction. We ask, once again, that you reconsider
engaging with us to fully evaluate this transformational
opportunity to combine our two companies. Our proposal stands until
4:00pm ET on Tuesday, November 3rd, 2015. If you do not engage with
us by then, our proposal will be withdrawn.
We have a unique window of opportunity to
create the best in class provider of outsourced clinical services
and truly give physicians a meaningful voice in the consolidation
of healthcare. The vision is clear and well understood by every
stakeholder. You have been clear since our first discussion
regarding concerns around timing and the potential interference
with the pending IPC transaction. Let me reiterate -- we would do
nothing to impede the remaining steps necessary to finance and
close the IPC transaction. We are fully supportive of that
transaction and it is in our collective best interest for the
closing to go smoothly. We firmly believe that the strategic
imperative for combining our organizations outweighs risks around
the integration of IPC. Consider that the potential synergies in
our combination are twice the contribution of IPC today. We
maintain our view that this transaction reduces shareholder risk
with respect to the IPC integration. After meeting with the
majority of both our shareholders over the past two weeks, we
believe they are supportive of the proposed merger at a fair
valuation and that the time to move forward with this combination
is now.
Your Board believes TeamHealth has standalone
growth prospects and value creation opportunities superior to the
value offered by our proposal and the value of the combined
company. We believe your shareholders should be given the
opportunity to fully evaluate that proposition. It is difficult to
see how any reasonable standalone financial forecast could equal or
surpass the value creation to your shareholders provided by this
proposal. We are proposing a true "50/50" merger, but with a
substantial cash control premium to your shareholders, including
approximately 30% of TeamHealth’s unaffected market equity value in
cash.
Our proposal should be considered even more
attractive given the recent challenges in the hospitalist and
emergency services sector. We remain supportive of the IPC
transaction, despite the challenging quarter it just announced.
That said, we believe the recent trading performance in the
hospitalist and emergency services sectors, as well as the recent
performance of IPC specifically, have reduced the likely unaffected
trading price of TeamHealth stock. Absent our public proposal,
TeamHealth would likely have traded down with a reasonable
assumption of a ~5% discount or ~$49 (Mednax and Envision
Healthcare declined 12% and 22%, respectively) to its unaffected
price of $52.50, this revised proposal would represent a ~40%
"headline premium." Given this dynamic, we believe our proposal is
reflective of two increases in value: 1) affirmation of our prior
proposal in light of the decline in valuation for the hospitalist
and emergency services sectors as well as IPC’s challenging
quarter, and 2) our increased proposal with $4.00 of additional
cash. We also believe the stock portion of our proposal is further
strengthened by the fact that AmSurg exceeded consensus estimates
for the third quarter by 10% versus the relatively weaker financial
performance of the physician services sector (TeamHealth, IPC,
Mednax and Envision Healthcare) and healthcare providers
broadly.
Your Board indicated that if TeamHealth were
to engage in a dialogue with AmSurg at some point in the future,
such engagement would not occur unilaterally, but as part of a
broader sale process involving multiple parties. We believe that
the public nature of this proposal -- as well as the proposed 50%
ongoing interest by TeamHealth shareholders in the combined company
-- provide ample flexibility for TeamHealth to engage in a dialogue
with AmSurg without conducting a lengthy auction process.
We remain very excited by the prospect of
combining our businesses and believe the combination of TeamHealth
and AmSurg is compelling strategically and financially. Our Board
of Directors and management team are committed to working with you
to pursue a transaction expeditiously.
We hope you and your Board will give this
bold opportunity the serious consideration it deserves and will
take into account input from TeamHealth shareholders, many of whom
have expressed to us support for a transaction.
We look forward to hearing from you
promptly.
Yours truly,
Christopher HoldenPresident and Chief
Executive Officer
About AmSurg Corp.
AmSurg’s Ambulatory Services Division acquires, develops and
operates ambulatory surgery centers in partnership with physicians
throughout the U.S. AmSurg’s Physician Services Division, Sheridan,
provides outsourced physician services in multiple specialties to
hospitals, ASCs and other healthcare facilities throughout the
U.S., primarily in the areas of anesthesiology, children’s
services, emergency medicine and radiology. Through these
businesses as of June 30, 2015, AmSurg owned and operated 250 ASCs
in 34 states and provided physician services to more than 350
healthcare facilities in 27 states. AmSurg has partnerships with,
or employs, over 5,000 physicians in 38 states and the District of
Columbia.
Forward-Looking Statements
This press release includes forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of
the Securities Exchange Act of 1934, as amended. These
forward-looking statements include, but are not limited to,
statements regarding AmSurg’s proposed business combination
transaction with TeamHealth (including financing of the proposed
transaction and the benefits, results, effects and timing of a
transaction), all statements regarding AmSurg’s (and AmSurg’s and
TeamHealth’s combined) expected future financial position, results
of operations, cash flows, financing plans, business strategy,
budgets, capital expenditures, competitive positions, growth
opportunities, plans and objectives of management, and statements
containing the words such as “anticipate,” “approximate,”
“believe,” “plan,” “estimate,” “expect,” “project,” “could,”
“would,” “should,” “will,” “intend,” “may,” “potential,” and other
similar expressions. Statements in this press release concerning
the business outlook or future economic performance, anticipated
profitability, revenues, expenses or other financial items, and
service line growth of AmSurg (and the combined businesses of
AmSurg and TeamHealth), together with other statements that are not
historical facts, are forward-looking statements that are estimates
reflecting the best judgment of AmSurg based upon currently
available information.
Such forward-looking statements are inherently uncertain, and
shareholders and other potential investors must recognize that
actual results may differ materially from AmSurg’s expectations as
a result of a variety of factors, including, without limitation,
those discussed below. Such forward-looking statements are based
upon management’s current expectations and include known and
unknown risks, uncertainties and other factors, many of which
AmSurg is unable to predict or control, that may cause AmSurg’s
actual results, performance or plans with respect to TeamHealth, to
differ materially from any future results, performance or plans
expressed or implied by such forward-looking statements. These
statements involve risks, uncertainties and other factors discussed
below and detailed from time to time in AmSurg’s filings with the
Securities and Exchange Commission (the “SEC”).
Risks and uncertainties related to the proposed transaction with
TeamHealth include, but are not limited to, uncertainty as to
whether AmSurg will further pursue, enter into or consummate the
transaction on the terms set forth in the proposal or on other
terms, potential adverse reactions or changes to business
relationships resulting from the announcement or completion of the
transaction, uncertainties as to the timing of the transaction,
adverse effects on AmSurg’s stock price resulting from the
announcement or consummation of the transaction or any failure to
complete the transaction, competitive responses to the announcement
or consummation of the transaction, the risk that regulatory,
licensure or other approvals and financing required for the
consummation of the transaction are not obtained or are obtained
subject to terms and conditions that are not anticipated, costs and
difficulties related to the integration of TeamHealth’s businesses
and operations with AmSurg’s businesses and operations, the
inability to obtain, or delays in obtaining, cost savings and
synergies from the transaction, unexpected costs, liabilities,
charges or expenses resulting from the transaction, litigation
relating to the transaction, the inability to retain key personnel,
and any changes in general economic and/or industry specific
conditions.
In addition to the factors set forth above, other factors that
may affect AmSurg’s plans, results or stock price including, but
not limited to, the following risks: AmSurg may face challenges
managing its physician services division as a new business and may
not realize anticipated benefits; AmSurg may become subject to
investigations by federal and state entities and unpredictable
impacts of the Health Reform Law; AmSurg may not be able to
successfully maintain effective internal controls over financial
reporting; AmSurg may not be able to implement its business
strategy, manage the growth in its business, and integrate acquired
businesses; AmSurg’s substantial indebtedness and restrictions in
its debt instruments could adversely affect its business or its
ability to implement its growth strategy, or limit its ability to
react to changes in the economy or its industry; AmSurg may not
generate sufficient cash to service its indebtedness; regulatory
changes may obligate AmSurg to buy out interests of physicians who
are minority owners of its surgery centers; AmSurg may not be able
to successfully maintain its information systems and processes,
implement new systems and processes, and maintain the security of
those systems and processes; AmSurg may be subject to litigation
and investigations and liability claims for damages and other
expenses not covered by insurance; AmSurg may be required to
write-off a portion of its intangible assets; payments from
third-party payors, including government healthcare programs, may
decrease or not increase as AmSurg’s costs increase; there may be
adverse developments affecting the medical practices of AmSurg’s
physician partners; AmSurg may not be able to maintain favorable
relations with its physician partners; AmSurg may not be able to
grow its ambulatory services revenue by increasing procedure volume
while maintaining operating margins and profitability at its
existing surgery centers; AmSurg may not be able to compete for
physician partners, managed care contracts, patients and strategic
relationships; adverse weather and other factors beyond AmSurg’s
control may affect its business; AmSurg may be adversely impacted
by changes in patient volume and patient mix; several client
relationships generate a significant portion of AmSurg’s physician
services revenues; AmSurg’s physician services contracts may be
cancelled or not renewed or AmSurg may not be able to enter into
additional contracts under terms acceptable to it; reimbursement
rates, revenue and profit margin under AmSurg’s fee-for-service
physician services payor contracts may decrease; AmSurg may not be
able to timely or accurately bill its services; AmSurg may not be
able to enroll its physician services providers in the Medicare and
Medicaid programs on a timely basis; AmSurg’s strategic
partnerships with healthcare providers may not be successful;
AmSurg may not be able to successfully recruit and retain
physicians, nurses and other clinical providers; AmSurg may not be
able to accurately assess the costs it will incur under new
contracts; AmSurg’s margins may be negatively impacted by
cross-selling to existing clients or selling bundled services to
new clients; AmSurg may not be able to enforce non-compete
agreements with its physicians and other clinical employees in some
jurisdictions; there may be unfavorable changes in regulatory,
economic and other conditions in the states where AmSurg operates;
legislative or regulatory action may make AmSurg’s captive
insurance company arrangement less feasible or otherwise reduce its
profitability; AmSurg’s reserves with respect to its losses covered
under its insurance programs may not be sufficient; and the other
risk factors are described in AmSurg’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2014, as updated by other
filings with the Securities and Exchange Commission. Consequently,
actual results, performance or developments may differ materially
from the forward-looking statements included above. AmSurg
disclaims any intent or obligation to update these forward-looking
statements.
AmSurg has provided information in this press release to compute
certain non-GAAP measurements for specified periods. A
reconciliation of the non-GAAP measurements to the GAAP
measurements is included this press release and on AmSurg’s web
site, www.amsurg.com, by following the link to Investors.
Additional Information
This press release is provided for informational purposes only
and does not constitute an offer to purchase or the solicitation of
an offer to sell any securities. Subject to future developments,
AmSurg may file a registration statement and/or tender offer
documents with the SEC in connection with a possible business
combination transaction with TeamHealth. AmSurg and TeamHealth
shareholders should read those filings, and any other filings made
by AmSurg with the SEC in connection with a possible business
combination, if any, as they will contain important information.
Those documents, if and when filed, as well as AmSurg’s other
public filings with the SEC, may be obtained without charge at the
SEC’s website at www.sec.gov and at AmSurg’s website at
www.amsurg.com.
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version on businesswire.com: http://www.businesswire.com/news/home/20151102005780/en/
Investor:AmSurg Corp.Claire M. Gulmi,
615-665-1283Executive Vice President and Chief Financial
OfficerorMedia:Sard Verbinnen &
CoJonathan Gasthalter/Jared Levy/David
Millar212-687-8080
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