Envision Healthcare and AMSURG Announce Transformational Merger

GREENWOOD VILLAGE, Colo. & NASHVILLE, Tenn.- Envision Healthcare and AMSURG Corp. have announced that they have signed a definitive merger agreement pursuant to which the companies will combine in an all-stock transaction at a fixed exchange ratio of 0.334 AMSURG shares per Envision share. The combined organization will have a pro forma market capitalization of approximately $10 billion and enterprise value of approximately $15 billion based on the closing stock prices of Envision and AMSURG on June 14, 2016. Envision shareholders will own approximately 53% percent and AMSURG shareholders will own approximately 47% percent of the combined organization on a fully diluted basis, including preferred shares. The transaction has been unanimously approved by the Boards of Directors of both companies.

Upon completion of the merger, which is expected to be tax-free to the shareholders of both organizations, the combined company will be named Envision Healthcare Corporation and co-headquartered in Nashville, Tennessee and Greenwood Village, Colorado. The Company’s common stock is expected to trade on the New York Stock Exchange under the ticker symbol: EVHC.

The combination of Envision and AMSURG brings together two leading, complementary healthcare companies to form one of the nation’s largest provider organizations, well positioned to help shape the future of healthcare delivery. Together, the companies manage a broad continuum of clinical network solutions, including outsourced physician services in the following specialties: emergency, hospitalist, anesthesia, radiology and children’s services. In addition, the companies provide solutions for ambulatory surgery, post-acute care and medical transportation. The two companies had combined revenue of more than $8.5 billion and Adjusted EBITDA of more than $1.1 billion for the 12 months ended March 31, 2016.

Upon closing of the transaction, William A. Sanger, who serves currently as President, Chief Executive Officer and Chairman of the Board of Envision, will be Executive Chairman of the Board. Christopher A. Holden will be President and Chief Executive Officer of the combined company, the same positions he holds at AMSURG. Claire Gulmi, AMSURG’s Chief Financial Officer, will retain that role at the combined company; Randy Owen, Envision’s Chief Financial Officer and Chief Operating Officer, will serve as President of Ambulatory Services at the combined company; and Robert Coward, current President of Sheridan and Chief Development Officer of AMSURG, will serve as President of Physician services. The newly formed Board will consist of 14 directors, comprised of equal numbers of current Envision and AMSURG directors, including Mr. Sanger and Mr. Holden.

Mr. Sanger said, “At Envision, we have been actively advancing our integrated delivery and market-centric strategies while AMSURG has been diversifying and building its national presence. Our two organizations complement each other in a way few others could, and this merger will accelerate our collective ability to positively impact healthcare delivery across the country. We are excited for the future and look forward to the opportunity to combine the resources of Envision and AMSURG.”

Mr. Holden added, “This merger will create a national platform with a highly differentiated suite of solutions. It will significantly increase our ability to empower physicians and expand our client relationships. Within a highly fragmented marketplace, we will have the critical first mover advantage to capitalize on the greenfield and cross-selling opportunities across our various offerings, and generate significant value for our shareholders.”

Compelling Strategic and Financial Rationale

• Compelling client proposition with differentiated service offerings: The combined organization will have complementary strengths as a physician-led, patient-focused healthcare services organization with a broad national footprint. The Company’s platform of differentiated service offerings will span from pre-hospital, acute and outpatient care to post-acute care.
• Well positioned for evolving healthcare environment: As a leader in each of its sub-specialties, the combined organization will be able to use its expansive network to improve patient outcomes and experiences while creating efficiencies through more effective care coordination.
• Strong financial profile: The combined company will have a strong balance sheet with anticipated Net Debt to Adjusted EBITDA at closing of 4.2x, including estimated contributions from recent acquisitions and estimated synergies. The Company will have a diversified business mix across verticals, geographies and clients, as well as significant cash-flow generation expected to be deployed for acquisitions, further driving growth while also reducing net leverage.
• Meaningful synergy opportunities: The combination is expected to result in $100 million of synergies, anticipated to be fully realized within three years of closing. Synergies are expected to be derived through cost savings as well as meaningful revenue synergies from an enhanced portfolio and cross-selling opportunities.
• Experienced, accomplished management team: The management team has a proven track record of building organizations for the changing healthcare environment and growth through both acquisitions and sales.
• Significant accretion: The transaction is expected to be accretive to the two companies’ combined adjusted earnings per share in 2017 and double-digit accretive in 2018.

Additional Transaction Details

JPMorgan Chase Bank and Barclays have provided committed financing for the transaction. The transaction is expected to close by year-end 2016, subject to regulatory approvals, approval by Envision and AMSURG shareholders and the satisfaction or waiver of customary closing conditions.

Advisors

Barclays is acting as lead financial advisor to Envision, with Evercore also acting as financial advisor and Debevoise & Plimpton LLP acting as its legal counsel. Guggenheim Securities and J.P. Morgan Securities LLC are acting as financial advisors for AMSURG and Bass, Berry & Sims PLC is acting as its legal counsel.

Conference Call and Webcast Details

Envision and AMSURG will hold a conference call Thursday, June 16, at 8:30 a.m. Eastern Time. The dial-in number is (888) 312-3055 (toll-free), Conference Code 4584718. Presentation materials related to the conference call will be available on both companies’ websites at www.evhc.net and www.amsurg.com, by following the links to “Investors.” A telephonic replay of the conference call will be available through 11:30 a.m. ET on June 23, 2016, by dialing (888) 203-1112 (toll-free) or (719) 457-0820 (toll) and entering Passcode 4584718. Investors will also have the opportunity to listen to the conference call over the Internet by going to either company’s website and following the link to “Investors” at least 15 minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available at these sites shortly after the call and continue for 30 days.

About Envision Healthcare Holdings

Envision Healthcare Holdings, Inc., offers an array of physician-led healthcare-related services to consumers, hospitals, healthcare systems, health plans and local, state and national government entities. The organization provides care across a broad patient continuum via American Medical Response, Inc. (AMR), EmCare Holdings, Inc. (EmCare) and Evolution Health, LLC (Evolution Health). AMR provides community-based medical transportation services, including emergency (‘911’), non-emergency, managed transportation, air ambulance and disaster response. EmCare’s integrated facility-based physician services include emergency, anesthesiology, hospitalist/inpatient care, intensive medicine, obstetrics and gynecology, radiology, tele-radiology and surgery. Evolution Health’s innovative and comprehensive care coordination solutions result in improved patient care delivery across a number of healthcare settings. Envision Healthcare is headquartered in Greenwood Village, Colorado. For additional information, visit www.evhc.net.

About AMSURG

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, radiology, children’s services and emergency medicine. Through these businesses as of March 31, 2016, AMSURG owned and operated 256 ASCs and one surgical hospital in 34 states and the District of Columbia and provided physician services to more than 450 healthcare facilities in 29 states. AMSURG has partnerships with, or employs, over 5,000 physicians and other healthcare professionals in 38 states and the District of Columbia.