MedPartners Will Purchase Doctor Group : Mergers: $332-million deal with Pacific Physician Services continues a trend.
Moving to create one of the nation’s largest physician management firms, MedPartners/Mullikin Inc. has agreed to acquire a large Southern California physicians group for about $332 million in stock.
MedPartners/Mullikin said its acquisition of Redlands-based Pacific Physician Services will create a company that manages medical practices for about 4,800 physicians in California and 21 other states, with combined annual revenue of about $1.1 billion. MedPartners/Mullikin was formed by a merger last month between Birmingham, Ala.-based MedPartners and Mullikin Medical Enterprises, a Los Angeles-area medical group.
The agreement is the latest in a series of deals involving Southern California physician groups responding to intense market competition and consolidation among health insurers.
Pacific Physician Services provides health-care services for about 313,000 members of health maintenance organizations, mostly in Riverside and San Bernardino counties.
The sale agreement comes a few weeks after Pacific Physicians co-founder Gary L. Groves retired as the company’s chairman and chief executive to seek medical treatment for a hereditary disease, company officials said.
Pacific Physicians Chief Executive Ronald D. Lossett said the company had been discussing a merger with Mullikin for several years and that the deal was not prompted by Groves’ illness.
Groves, an emergency room doctor, started the company in 1983 and took it public in November 1991, at about $9 a share. He owns a 20% stake in Pacific Physicians.
MedPartners soared $4.50 to $33.25 a share Tuesday. Pacific Physicians closed unchanged at $17.875. Both trade on Nasdaq.
On Monday, before the MedPartners deal was publicly announced, Pacific Physicians stock rose $1.125. A MedPartners official said he knew of no reason for the uptick but speculated that it might have risen in anticipation of Pacific’s earnings report, also announced Tuesday. Earnings for the fiscal first quarter ended Oct. 31 rose 27% to $3.1 million. Sales were up 20% to $105 million.
