Ambulance operator Rural/Metro Corp. has reached a multimillion dollar deal to be acquired by its competitor, a move that could end the Scottsdale company’s financial woes and may erode local industry competition.
In a statement Thursday, Colorado-based Envision Healthcare Holdings Inc. said the deal is expected to close during the fourth quarter with financing from Barclays and Goldman, Sachs & Co. Although the purchase price wasn’t disclosed, the Wall Street Journal estimated the deal at about $620 million in cash.
Envision, a publicly traded health care company, said it reached the purchase agreement with Rural/Metro through its medical transportation subsidiary American Medical Response, or AMR, which received approval from the state earlier this year to compete with Rural/Metro in Maricopa County.
“This acquisition will broaden our ability to partner with fire departments and local government leadership to build increasingly better community health models,” Ted Van Horne, AMR’s president and CEO, said in the statement. “It also gives us the ability to offer specialty fire capabilities within our industrial health and safety business lines.”
The deal could mop up several years worth of financial messes for Rural/Metro. It filed Chapter 11 bankruptcy in August 2013 and the following month became the target of a new investigation launched by the Arizona Department of Health Services over the company's slow emergency response times. The Scottsdale firm emerged from bankruptcy in early 2014 with a $135 million cash infusion from bondholders.
But Rural/Metro faced another obstacle when it’s reign as the Valley's primary ambulance company came under threat. After Rural/Metro filed bankruptcy, Envision’s AMR asked state regulators for permission to compete for emergency and non-emergency contracts in Maricopa County. The Arizona Department of Health Services gave the green light early this year, making AMR the second private ambulance company to operate in a market that had previously been almost entirely monopolized by Rural/Metro.
But with the two rivals now joining forces, the newfound local competition may be undermined.
