Financial potholes that beset a competitor in the ambulatory care and emergency services industry could prove a boost for Envision Healthcare, according to Goldman Sachs.
Envision owns American Medical Response, an ambulance service business that has more than 12,000 paramedics and emergency medical technicians.
Rival ambulatory services provider Rural/Metro Corp. announced in August that it was filing for Chapter 11 bankruptcy protection under which it would try to renegotiate unprofitable contracts.
Envision, based in Greenwood Village, Colo., provides physician services in areas like emergency, hospitalist and inpatient care and medical transportation that includes air ambulances and disaster response.
THE OPINION: With Rural/Metro undergoing a significant restructuring, American Medical may gain some leverage in pricing, according to Goldman Sachs analyst Brian Zimmerman. He raised his 12-month price target on the stock to $29 from $26 on Monday.
"Though we project AMR's revenue growth still to be significantly below (Envision's) physician management business, EmCare, we believe AMR is proving to be another meaningful growth driver for the company," Zimmerman wrote.
THE STOCK: Shares of Envision Healthcare Holdings Inc. closed at $28.48 on Monday. The stock has climbed 13 percent since closing at $25.15 on Aug. 14, its first trading day after the company held an initial public offering of its stock.