AMN Healthcare – the leader and innovator in total talent solutions for healthcare organizations across the United States – recently announced a definitive agreement to acquire MSDR for a purchase price of $300 million. MSDR comprises two healthcare staffing companies specializing in locum tenens and advanced practices: Medical Search International (MSI) and DRW Healthcare Staffing (DRW).
MSI, launched in 2002, serves healthcare systems across the United States by placing high-quality healthcare professionals that specialize in psychiatry, anesthesia, radiology, and surgery. And DRW, founded in 2011, specializes in psychiatry, anesthesia, and surgery. Both companies are valued leaders in the locums industry. Chris Wang, Chief Executive Officer, Managing Partner of DRW, will remain with the business as the President of MSDR.
The deal positions AMN Healthcare for substantial revenue growth in locum tenens. MSDR revenue was $104 million in 2022, and year-to-date annualized 2023 revenue is approximately $155 million. And the company expects the deal will be modestly accretive to adjusted EPS in the first twelve months. The deal, subject to regulatory approvals and customary closing conditions, is expected to close in the fourth quarter of 2023. This deal is expected to be funded with cash on hand and borrowings on our revolving credit facility.
For income tax reporting purposes, the acquisition of DRW will be treated as an asset purchase, resulting in a step-up in the tax basis of the intangible assets acquired. This step-up in tax basis is expected to result in an annual cash tax savings of about $2 million over the next 15 years from the amortization of these assets for income tax purposes.
With the acquisition of MSDR, AMN Healthcare’s portfolio of solutions expands to provide clients with a larger and more diverse candidate pool that includes healthcare professionals that specialize in some of the most needed, in-demand services. And the deal also allows AMN Healthcare and clients to benefit from the expertise and knowledge of the MSDR team in recruitment, placement, and operations, including candidate matching technology that is tailored for locum tenens.
“We are very excited to welcome the MSDR team into the AMN Healthcare family and expand the workforce solutions available to our clients across the country. Now more than ever, it is critically important that healthcare systems have streamlined access to the services, technologies, and healthcare professionals needed to support the patients and communities they serve. This acquisition is the result of our continued dedication to meet the needs of our clients, who I am confident will see the breadth and value of our services increased with this acquisition of MSDR.”
— AMN Healthcare President and Chief Executive Officer Cary Grace