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Envision Healthcare Rallies on Infinity Healthcare Buyout

Zacks Equity Research

Envision Healthcare Corporation EVHC, a leading provider of physician-led outsourced medical services to consumers, hospitals and healthcare systems, recently announced that Envision Physician Services has acquired Infinity Healthcare, a multi-specialty physician group practice to deliver emergency care, hospitalist medicines, and anesthesia and radiology services to patients in Wisconsin and Illinois.

In a separate press release, the company also announced the takeover of Northside Emergency Associates, an emergency medicine physician group practice based in the Atlanta metropolitan area. Envision Healthcare has rallied 2% to close at $62.29 following the news release.

Envision Healthcare has been strengthening its foothold in the niche markets with a series of acquisitions of late. The recent acquisition of Connecticut-based Anesthesia Associates of New London deserves a mention in this regard.

In fact, to strengthen the company’s inorganic growth story, Envision Healthcare made net acquisition and development capital expenditures worth $73 million in the first quarter. In the quarter, the company completed transactions for three physician practice acquisitions and two ambulatory surgery centers.

Getting back to the recent buyout, Infinity Healthcare has 25 emergency medicine sites, 10 urgent care centers, six anesthesia, two radiology and two hospitalist medicine programs for health systems (including Ascension Health, Hospital Sisters Health System and other systems). Tapping into new geographic markets and partnerships with leading health systems are key catalysts for Envision Healthcare at the moment.

We are also upbeat on the company’s solid guidance for full-year 2017. Revenues are forecasted in the band of $7.8 billion to $8.05 billion. Adjusted earnings from continuing operations are now projected in the range of $3.38 to $3.50 for the full year.

Solid Share Price Trend

A glimpse at the share price performance of the company reveals that Envision Healthcare has had an impressive run on the bourse over the last one month. The company’s share price has outperformed the Zacks classified Medical - Outpatient and Home Healthcare sub-industry. The stock has rallied 13.5%, outshining the sub-industry’s gain of 3.9%. Notably, Envision Healthcare has a market cap of $11.5 billion.

Taking the stable performance of the stock into consideration, we expect Envision Healthcare to gain more ground in the coming quarters. The company’s long-term growth of almost 10.8% also raises optimism.

The stock currently has a Zacks Rank #2 (Buy).

Other Key Picks

Other top-ranked stocks in the broader medical sector are Inogen Inc. INGN, Mesa Laboratories, Inc. MLAB and Edap Tms S.a. EDAP. Notably, all the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Inogen has a long-term expected earnings growth rate of 17.50%. Notably, the stock represents an impressive one-year return of 82%.

Mesa Laboratories has a positive earnings surprise of 2.84% over the last four quarters. Notably, the stock represents an impressive one-year return of 15.3%.

Edap Tms has a positive return of 26% for the last three months. The company posted a solid earnings surprise of 533.3% in the last reported quarter.

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