Sheridan – the Physician Services Division of Tennessee-based healthcare provider AmSurg Corp. AMSG – recently took over Arizona-based Premier Emergency Medical Specialists (PEMS). This marks Sheridan’s foray into the emergency medicine specialty in Phoenix, AR. The financial terms of the transaction have been kept under wraps.
PEMS currently has 49 physicians and is the sole provider of emergency services at two Dignity Health hospitals – Chandler Regional Medical Center and Mercy Gilbert Medical Center. It provides high quality care to patients in the company’s hospital client emergency rooms. According to both PEMS and AmSurg, the combined force will facilitate clinical excellence and boost the latter’s presence in the Phoenix market.
The PEMS buyout is in line with AmSurg’s investment strategy, through which management seeks to capitalize on significant acquisition opportunities in the rapidly expanding physician services space, with particular focus on emergency and anesthesia services.
The PEMS emergency group will be the third AmSurg-Sheridan hospital-based specialty in Arizona, which will join Sheridan’s existing anesthesia and neonatal hospital practices. AmSurg’s three specialty practices together serve more than 50 hospitals and ambulatory surgery centers in the state. The company expects to ramp up its count significantly in the years ahead.
In this context, we encouragingly note that, with the implementation of the Affordable Care Act, aging demographic trends in the U.S. and an increased insured population base should encourage a rise in surgery volumes. This will naturally enhance demand for emergency medical specialty services.
Following the acquisition of Sheridan Healthcare, AmSurg has become a prominent player in the physician-centric surgical center and physician outsourcing business with a diversified, complementary business mix and a significantly enhanced growth profile.
Given that the market for outsourced physician services is highly fragmented and predominantly served by small provider groups, AmSurg believes there is significant opportunity for further growth through new contract wins from smaller provider groups and through targeted acquisitions. We expect AmSurg to confidently proceed on its acquisition pipeline, supported by a strong cash position.
Zacks Rank
AmSurg currently carries a Zacks Rank #2 (Buy). Some favorably-ranked medical stocks are Foundation Healthcare, Inc. FDNH, LHC Group, Inc. LHCG and PharMerica Corporation PMC. All the three stocks sport a Zacks Rank #1 (Strong Buy).
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