EVHC - Envision Healthcare Corp

[ValueMaven]

Name was down big today...a lot of interesting things going on in the company.  See Starboard's recent presentation from early Oct suggesting a much higher price.  Very interested in having a debate on this name...

 

VM

Starboard_Value_LP_Capitalize_for_Kids_EVHC_Presentation_10.19.2017.pdf

[RadMan24]

No expert, but to kick some things off. On the call, CEO states, "We believe that as we complete 2017, the baseline adjusted EBITDA of our business is closer to $900 million." Then they estimate incremental runrate EBITDA of $50 million in 2018. Guidance for 2018 not released yet, however.

 

These values are way below previous management and even Starboard estimates. Looking at the cash flow statement, I have couple questions:

 

• How much value are the acquisitions adding to the company, particularly to the cash generation?
   
  
• Organic growth is 1-2%; M&A growth ~5%, so adjusted numbers galore. But I wonder, would the company grow cash or maintain free cash flow without M&A?
   
   
  
  • Is it feasible to scale up in this industry? It's largely fragmented, yes, but does scale work here? Even looking at Starboard's presentation, synergies seem weak and are easily offset by other factors.. I also get skeptical looking at the track record of acquisitions in this industry. (Teamhealth and Envision's own acquisition of Amsurg)