Healthcare Staffing Report: Aug. 6, 2015

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Team Health Q2 net revenue edges down, acquires IPC and other firm

Team Health Holdings Inc. (NYSE: TMH) reported second-quarter net revenue rose 30.1% to $878.0 million. Team Health ranks on Staffing Industry Analysts’ list largest US healthcare staffing providers, but has significant other healthcare operations. The firm also announced two acquisitions: IPC Healthcare Inc. and Brookhaven Anesthesia Associates.

Revenue growth was driven by positive contributions from acquisitions, net new contract sales, and same contract results.

“Similar to our results in Q1, the company continued to benefit from the significant number of transactions we closed in 2014 and 2015, as the financial performance of our recent acquisitions was the most significant driver of our revenue increase in the quarter,” said President and CEO Mike Snow.

Net new contracts were the second largest contributor to revenue growth.

“In addition, we experienced robust patient volume growth and continued to see a reduction in the percentage of uninsured patients that we treat that helped contribute to solid same contract performance,” Snow said. “These results reflect our integrated and complementary approach to achieving our financial targets.”

Net earnings attributable to Team Health fell 4.2% in the second quarter to $28.9 million.

Financial results for the second quarter of 2015 included $7.9 million of contingent purchase and other acquisition compensation expense ($7.0 million after-tax), and non-cash amortization expense of $21.2 million ($15.3 million after-tax).

In a separate announcement issued today, Team Health announced a definitive agreement to acquire IPC Healthcare Inc., a national acute hospitalist and post-acute provider organization, in an all-cash transaction with an enterprise value of approximately $1.6 billion. The transaction is expected to close during the fourth quarter of 2015.

“This is an important strategic and logical next step for Team Health, and we have found the right partner in IPC Healthcare,” Snow said. “This combination brings together two physician-centric companies to create the leading physician services organization with an enhanced financial and strategic position that we believe will benefit our clinicians, hospital partners, employees and shareholders.”

Team Health also acquired of the operations of Brookhaven Anesthesia Associates. Based in Patchogue, NY, Brookhaven Anesthesia Associates has staffed and provided anesthesia services at Brookhaven Memorial Hospital Medical Center for 25 years and also serves four surgery centers in the surrounding community. The acquisition adds more than 30,000 annual anesthesia cases to Team Health's existing anesthesia operations.