Medical-transportation company Air Medical Resource Group is navigating its way toward a sale, according to three sources.
An auction for the provider of emergency air medical services is being conducted by Wells Fargo Securities, according to two sources, one of whom said the sales process is in its late stages. A number of large private equity funds have looked at AMRG, including KKR’s Air Medical Group Holdings, this person said.
AMRG, South Doran, Utah, is likely to command at least 10 to 11 times its about $70 million of EBITDA, one source estimated, implying a deal is likely to be valued north of $700 million.
AMRG’s 11 companies provide air and ground ambulance transportation across 14 states, primarily in the western U.S., and Puerto Rico.
Consolidation in medical transport has been relatively minimal over the years, with KKR’s 2015 deal for Air Medical Group Holdings among the most notable. The New York-based sponsor bought Air Medical Group Holdings, Lewisville, Texas, from Bain Capital and Brockway Moran in a deal reportedly valued close to $2 billion.
KKR’s AMGH, formerly Air Evac Lifeteam, is considered the largest independent provider of air medical services in the U.S. in terms of patient volume, Moody’s says. The company generated $919 million of revenue for the year ended March 31, 2016, a July 2016 report by the credit-rating firm shows.
The KKR-backed air ambulance service has proven to be acquisitive, scooping up Northern California’s California Shock Trauma Air Rescue via its Reach Air Medical Services subsidiary in 2016. Terms weren’t disclosed.
While the air medical sector has a multisite healthcare-services angle to it that might appeal to financial buyers, the space has also seen its fair share of challenges, one source noted.
The nation’s largest operator of air medical emergency transportation is publicly traded Air Methods, which has faced public scrutiny for aggressive pricing tactics and has been the target of activist pressure.
Dan Plant’s Voce Capital hedge fund in January threatened a proxy fight at the the company to gain more seats on the board. And not long ago, The Wall Street Journal reported that Air Methods was working with advisers to explore a potential sale.
Other recent PE activity in the sector includes the majority recapitalization of Medway Air Ambulance, the Lawrenceville, Georgia, medical air transport company, by Merit Capital Partners and American Working Capital. Terms of the January 2016 deal weren’t disclosed.
A KKR spokeswoman declined comment. Representatives of Wells Fargo and AMRG didn’t return calls.
Action Item: AMRG headquarters: +1 801-619-4900
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