Emergency Medical Services said it would review its strategic alternatives. The company, which was taken public by Onex Corp. in 2005, could be targeted by private equity again.

Greenwood Village, Colo.-based Emergency Medical operates through two segments, a healthcare transportation services business, American Medical Response (AMR), and a facility-based physician services arm, EmCare Holdings.

Onex acquired EMS in February 2005, investing roughly $266 million to buy the AMR and EmCare subsidiaries from Laidlaw International. Onex took the company public that December. The investment has already been a profitable one for Onex, as the firm has pared down its stake in successive secondary sales. According to its most recent 10K, Onex controlled just over 30% of the equity in EMS, but maintained majority ownership of the company’s voting stock.

According to the New York Times’ DealBook blog, Bain Capital and Kohlberg Kravis Roberts approached EMS about a possible deal. However, an analyst note from Feltl & Co., found on Thomson One Analytics, suggests that new bidders will emerge.

“It’s a long way from exploring to closing, and the question of how much EMS could sell for is probably easier to answer than who it could be sold too,” the Feltl analysts wrote.



Beyond private equity, Feltl identified TeamHealth as the most likely strategic buyer, a company that is backed by The Blackstone Group.

Using an LBO model, Feltl set a valuation floor of 9x to 9.5x forward-looking Ebitda, which would translate into a purchase price of between $70 and $75 a share. Despite the improving credit markets, the analysts added that “leverage is the limiting factor,” but noted that a breakup of EmCare and AMR would present other opportunities.

Other analysts were less optimistic. Deutsche Bank actually downgraded EMS on the news, and suggested a takeout value of $67 would be appropriate for financial buyers, “but not much higher." A sum-of-parts analysis yielded multiples of 7x forward-looking Ebitda for AMR and 9x for EmCare.

The news follows an unsolicited bid by Community Health Systems to acquire Tenet Healthcare Corp., valuing the target at $7.3 billion. Analysts covering the sector cited that the effort could kickstart M&A in the healthcare services space.