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PE-backed PhyMed eyes 2016 M&A strategy, welcomes sell-side approaches
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PhyMed's Michael Weaver

Updated: Feb. 24, 2016 PhyMed announced today Anesthesia Associates of York (Pa.) and Anesthesia Associates of Laurel (Md.) have joined PhyMed Healthcare Group. - Ed.

PHYMED Healthcare Group, the private equity-backed anesthesia, critical care and pain management services consolidator, is finalizing its 2016 M&A plan and welcomes sell-side approaches, said SVP Michael Weaver.

The Midtown Nashville-based company is likely to do at least "four to six" and possibly significantly more physicians practice group acquisitions in 2016, said Weaver.

Weaver's addition to PhyMed management was announced in September. Weaver, 52, has previously held executive roles with Vanguard Health Systems, Sheridan Healthcare, Symbion Healthcare and Tenet Healthcare. His LinkedIn is here.

"We're going to be very bold, but -- underscored -- prudent," Weaver emphasized, adding that notwithstanding ample opportunities for exits, management is genuinely determined "to grow a Nashville-born and bred legacy company," but not by participating in what he called "a land grab."

The company's M&A pipeline activity is "feverish," and, in line with direction from its board of directors, its acquisitions pace is likely to continue, he said. While groups aligned with hospitals and ambulatory surgery centers are its priority, Weaver noted that the company is looking at other "like-minded" service segments, as well.

Though PhyMed's immediate goal is to reinforce what the company believes is its status as a leading "superregional" company in the MidWest/Southeast, Weaver said PhyMed will also pursue reputable practices with significant market share, anywhere in the nation.

The option of selective large transformative buys is on the table. The company will be as "aggressive" as is warranted in the interest of shareholders, said Weaver.

PhyMed is majority-owned by Teachers' Private Capital (TPC, $15BN portfolio), the Toronto-based affiliate of Ontario Teachers' Pension Plan ($154BN assets).

Sami Abassi

Since TPC's investment, PhyMed has brought aboard a new CEO, Sami Abassi; and, a new CFO, Sam Daniel.

Teachers' acquired PhyMed in 2014 from Denver-based Excellere Partners, which recapitalized the firm in 2012 with a reported $42MM investment. No terms of any PhyMed-related transactions have been disclosed. Based on TPC information online, the PE's minimum investment in PhyMed was greater than $150MM.

PhyMed has 43 announced locations and conducts more than 200,000 recoverable anesthesiology events, annually, said Weaver.

PhyMed traces its operating lineage to 1994. Weaver said the company now has 135 anesthesiologists and nearly 350 certified registered nurse anesthetists (CRNAs), numbers that rose with PhyMed's recent acquisition of Middle Tennessee-based Anesthesia Services Associates (ASA), announced in November. Its companywide workforce was put at 580 in a report early this year.

He explained that while the company's lineage and reputation have been developed over decades, PhyMed has only been established a couple of years as a growth platform.

That fact, plus rapid and streamlined transactions, with all holders having the same class of stock -- plus a chance to personally influence the trajectory and reputation of a potentially high-profile company -- are among PhyMed's attractants, said Weaver.

The cornerstone of today's PhyMed is represented by Anesthesia Medical Group, founded in 1994. The PhyMed headquarters staff on 29th Avenue, including information technology, totals close to 100.

Weaver, 52, said he expects to grow his internal M&A team, but added that he and TPC know the value of third-party advisors.

PhyMed is regularly approached by operators or their representatives. Material online shows, for example, that PhyMed's 2013 acquisitions of Lebanon Anesthesia Associates and an LAA affiliate were set into motion by an LAA advisor, Pennsylvania-based Haverford Healthcare Advisors.

Other to-do's: PhyMed is revisiting its marketing strategy; and, the company is likely to address rebranding within 18 months, said Weaver.

Chrm. Chris Ferrara

The chairman of the PhyMed board is Chris Ferrara a portfolio manager of Ontario Teachers'.

PhyMed advisors include attorneys with Bass Berry & Sims; Alvarez & Marsal; and, Vaughn & Associates (Louisiana). MARSH supports risk management; and, Dodge Communications supports corporate communications. The company was advised during the Ontario Teachers' recap by Raymond James.

Other entrants in the sector include three Tennessee players: AmSurg (the Nashville firm that bought Sheridan, and which recently withdrew its sweetened bid for competitor TEAM Health, based in Knoxville); H.I.G. Capital-backed Surgery Partners (fka Symbion); and, Florida-based MEDNAX.

AmSurg recently announced plans for debt restructuring process that could free additional powder to address AmSurg's reported $500MM M&A pipeline.

An executive with advisor MHT MidSpan wrote in Becker's Hospital Review a year ago that nearly 100 anesthesiology practice group transactions had occurred in the 2010-2014 five-year period. VNC

Note: story last edited 17 December 3:57pm to correct PhyMed chairman's name.-Ed.

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Tags: Alvarez and Marsal, ambulatory surgery centers, AmSurg, anesthesiology, ASCs, Bass Berry Sims, Chris Ferrara, MARSH, mergers, MHT Midspan, Michael Weaver, Ontario Teachers' Pension Plan, pain management, PhyMed Healthcare Group, Raymond James, recapitalization, Sam Daniel, Sami Abassi, Sheridan, Symbion, Teachers' Private Capital, TEAM Health, Vaughn Associates

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