Envision Healthcare Holdings Inc. sold 20% more shares than
planned in its initial public offering as the deal priced at the
high end of its expectations, a strong showing for one of the last
debuts before Wall Street's late-summer lull.
The medical-services company agreed to sell 42 million shares
for $23 each, people familiar with the matter said Tuesday, raising
$966 million before the potential sale of additional shares to
underwriters. Envision had offered 35 million shares, expecting
them to price at $20 to $23 apiece.
The IPO is the largest in the U.S. since building materials
maker HD Supply Holdings Inc.'s $1.1 billion debut in late June. It
comes just ahead of a late-August lull for deals as money managers
leave for summer vacations. Since 2005, just two U.S.-listed IPOs
have priced during the last two weeks of August, according to
Ipreo, a capital markets data and advisory firm.
Greenwood Village, Colo.-based Envision, which provides contract
emergency-room staffing for hospitals and ambulance services for
local governments, has been expanding by signing new contracts and
acquiring small and regional physician practices that perform
similar roles. In the three months ended June 30, its profit rose
22% to $9.6 million as revenue climbed 12% to $899 million.
"The growth story is good," said Tim Nelson, a senior analyst at
Nuveen Asset Management, which oversees more than $120 billion. "I
expect them to continue to get new contracts and I expect them to
continue to be able to buy mom-and-pop practices and gain share. I
don't think it's overpriced, by any means."
Investors also expect the company to benefit from the nation's
health-care overhaul, which is expected to expand coverage to
millions of Americans starting next year. Though it's hard to say
precisely how much because of uncertainty about the implementation
of the new rules, Mr. Nelson said. In the latest quarter, Envision
set aside a $791 million provision for uncompensated care.
The IPO follows big share gains by Envision's peers this year.
Team Health Holdings Inc.'s (TMH) shares have gained 40%
year-to-date, well ahead of the 19% gain in the S&P 500. IPC
The Hospitalist Company Inc. (IPCM), a provider of physicians in
hospitals and clinics, is up 35%.
Envision is returning to public ownership after a $2.9 billion
buyout by private-equity firm Clayton, Dubilier & Rice LLC in
February 2011. The investors also assumed $300 million in debt
carried by the company, then named Emergency Medical Services
Corp.
The shares are slated to start trading Wednesday under the
symbol EVHC. Goldman Sachs Group Inc. is leading the deal with
Barclays PLC, Bank of America Corp. and Citigroup Inc.
Write to Matt Jarzemsky at matthew.jarzemsky@dowjones.com
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