CareLine of Irvine to Buy 2 Firms : Health care: Purchase of ambulance companies would create the largest private emergency medical operator in Philadelphia.
CareLine Inc., operator of one of the nation’s largest ambulance services, outbid two competitors for a pair of Philadelphia ambulance companies in a move that would create that city’s largest private emergency medical operator.
CareLine, a 2-year-old Irvine firm that began selling stock publicly in December, said Wednesday that it signed a letter of intent to acquire privately held LifeLine Ambulance and Procor Ambulance for an undisclosed sum.
The proposed takeovers come as the long-fragmented ambulance industry is coming together. The nation’s three publicly held ambulance companies have been in existence for just a few years and are racing to consolidate as national health care cost-cutting moves ahead.
“This is really going to give us a significant market share” in Philadelphia, said CareLine Chief Executive M. Keith Huzyak, adding that he expects the deal to be finalized within 60 days. “We will pick up immediate economies of scale.”
The agreements to purchase LifeLine and Procor came after two months of outbidding its staunchest rivals--American Medical Response Inc. of Boston and Rural/Metro Corp. of Scottsdale, Ariz., analysts said.
All three companies have been vying to bring together an industry that until recently has not had many large regional players. In Orange and Los Angeles counties alone, for instance, 43 ambulance services compete for business.
The push toward national consolidation has increased dramatically, especially because of acquisitions by CareLine and American Medical Response, the nation’s largest ambulance operator.
Since its founding in 1992, CareLine has bought nine small ambulance services in San Bernardino, Los Angeles and Riverside counties as well as companies in Birmingham, Ala.; Pueblo, Colo.; Atlanta, and Boston. CareLine now has annual revenue of $32.3 million and employs about 1,200 ambulance drivers, emergency medical technicians and other personnel.
Sheryl R. Skolnick, a health analyst with the Robertson Stephen & Co. brokerage in New York, said the company is well positioned for further growth.
CareLine stock first sold at $8.50 a share when it began trading on the Nasdaq market in December. Shares have traded up sharply since then, to close Wednesday at $13.25 a share, up $1.50 a share from Tuesday.
Skolnick said that the public offering raised about $46 million for CareLine, allowing it to clear all debt from its books.
“They have a vision and they are buying a lot of companies,” she said.
But Skolnick cautioned that an overly aggressive buying spree could backfire if companies like CareLine do not carefully manage the newly purchased divisions.
“They’ve demonstrated that they can buy the companies,” she said. “But the real challenge will be if they can operate them efficiently, save money and improve the quality of care.”
