Healthcare Staffing Report: Dec. 3, 2015

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AMN to acquire healthcare search firm B.E. Smith

AMN Healthcare Services Inc. (NYSE: AHS), the largest US healthcare staffing firm, agreed to acquire B.E. Smith, an executive search firm specializing in healthcare, for $160 million in cash.

Founded in 1978, B.E. Smith provides senior-level leadership services including interim leadership, executive search and advisory services.

The purchase price is expected to be funded through a combination of term loan borrowings and revolver draws under the company's credit facility. The acquisition, subject to regulatory approvals and customary closing conditions, is expected to close as early as Jan. 4, 2016. AMN will realize tax benefits having an estimated net present value of approximately $25 million.

“AMN Healthcare has stated publicly that they are committed to becoming the leader in workforce solutions,” said David Francis, research associate at Staffing Industry Analysts. “This acquisition further demonstrates AMN is putting its money where its mouth is. When viewed along with the other two acquisitions in healthcare leadership and executive search they’ve made recently – Millican Solutions and The First String – I think it shows that AMN is banking on the importance that leadership roles will have in hospitals and other healthcare settings as the US healthcare system undergoes continued transformation."

According to a filing with the US Securities and Exchange Commission, AMN entered into a stock purchase agreement with Josem Holding Inc., a Kansas corporation and the sole owner and holding company of B.E. Smith Inc., and John D. Smith, the sole owner of all issued and outstanding shares of capital stock of the company. The purchase agreement calls for Josem Holding to become a wholly owned subsidiary of AMN and B.E. Smith Inc. to become an indirect wholly owned subsidiary of AMN.

“With increased demand and the evolution of new care delivery models, healthcare clients are faced with the critical challenge of recruiting the key executives and talent needed to lead the dramatic transformation their organizations are experiencing,” said AMN Healthcare President and CEO Susan Salka. “The added strength of B.E. Smith's recruitment expertise and nationwide talent pool of healthcare leaders and executives further increases the strategic value that AMN Healthcare delivers to clients through our breadth of innovative workforce solutions.”

“We are pleased to carry forward the legacy and strength of B.E. Smith as part of AMN Healthcare's prestigious recruitment and workforce solutions brands,” said B.E. Smith President and CEO Doug Smith. “The combined services of AMN and B.E. Smith provide increased value for all clients through an expanded network of quality healthcare leaders and a suite of workforce solutions offerings that are differentiated in the healthcare industry.”

Third-quarter revenue at AMN rose 45%, driven by organic growth of 29%. The San Diego-based firm reported demand is at historically high levels.