UBS Sees $43-$44 Deal Value For Potential TeamHealth Sale

Shares of TeamHealth Holdings Inc TMH rose more than 3 percent following a Wall Street Journal report saying the company is exploring a sale to a private-equity firm. UBS says a potential deal may value TeamHealth in a range of $43-$44 per share.

The report comes as the company's second half is being seen at risk following challenges related to IPC integration and payer mix in its second quarter. The company has also recently changed CEOs.

Importantly, TeamHealth has a bleak past with respect to M&A. In November 2015, rival Amsurg Corp AMSG withdrew its $70 bid to buy within two weeks of the offer. Since then, shares have fallen as the company has continued to struggle with the IPC integration.

Further, the M&A rumors came after Jana Partners took an activist stake in TeamHealth in the spring of 2016.

"With the company's nearest competitors, Amsurg and Envision Healthcare Holdings Inc EVHC, involved in their own transaction, a clear-cut strategic buyer is not obvious," UBS analyst A.J. Rice wrote in a note.

Rice, who has a Neutral rating and $43 price target on the stock, believes TeamHealth possesses premium assets. Rice's analysis of LBO and M&A in the sector imply potential deal value in the range of $43-$44 and enterprise value range of roughly just under $6 billion (assuming 5 percent transaction fees).

At time of writing, shares of TeamHealth rose 3.51 percent to $39.54.