Envision Healthcare to buy Ambulance-Services Provider Rural/Metro Corp. for $620 million

Friday, July 31, 2015

Envision Healthcare Holdings Inc. has reached a deal to buy privately held ambulance and fire-protection services company Rural/Metro Corp. for $620 million in cash.

Buyout firm Warburg Pincus took Rural/Metro private in 2011. After struggling with declining revenue related to ambulance trips and from heavy debt, Rural/Metro filed for bankruptcy in 2013, emerging with a new $135 million capital infusion from bondholders. The company’s bondholders at the time included Oaktree Capital Group LLC.

Rural/Metro is expected to generate annualized 2015 revenue of about $600 million, Envision said.

The deal is projected to close in the fourth quarter and is expected to add to earnings.

Envision also announced second-quarter results, reporting net income of $52.4 million, or 27 cents a share, compared with a loss of $2 million, or one cent a share, a year earlier. Revenue rose 26%, to $1.35 billion.

Envision’s operations include medical transportation segment American Medical Response and the EmCare Holdings physician services segment.

In October 2014, a Delaware judge ordered RBC Capital Markets LLC to pay $75.8 million to former shareholders of Rural/Metro, in one of the largest damages rulings against a bank for its deal advice.

The damages award came after the judge ruled in March 2014 that RBC’s alleged desire to reap fees on both sides of the deal—as an adviser to the company and a lender to Warburg Pincus—tainted its boardroom advice and wasn’t adequately disclosed to the company or its shareholders.

RBC, a unit of Royal Bank of Canada, has maintained it acted properly.

Discussing its second-quarter results, Envision said acquisitions and strong organic growth helped its revenue. Earnings excluding items were 37 cents a share, while analysts polled by Thomson Reuters projected 35 cents. The company reaffirmed full-year guidance of $1.42 to $1.50, a figure that doesn’t include any effects from the Rural/Metro deal.