Byline: Carly Harrington
Oct. 19--Knoxville physician staffing company Team Health is being acquired by the New York private equity firm The Blackstone Group, stopping Team Health's plans to go public.
The company's headquarters will remain in Knoxville, and the current management team will continue to lead the company and remain significant equity holders, Team Health's co-founder, chairman and chief executive Lynn Massingale said Tuesday.
Terms of the deal, which is expected to be completed by mid-February, are not being disclosed.
Team Health employs about 7,000 health-care professionals in 44 states and is the nation's largest provider of hospital-based clinical outsourcing. It specializes in emergency medicine, hospital medicine, anesthesia, teleradiology, pediatrics, critical care and military staffing.
The company employs almost 900 in Knoxville and reported 2004 net revenue of $1.6 billion.
Blackstone's acquisition 'is strictly an investment interest,' Massingale said. 'There's no merger. Management stays intact.' Massingale said Team Health was in the process of launching an initial public offering of stock when Blackstone expressed an interest in the company.
'They elected to make a proposal to us that was compelling,' Massingale said. 'Overall, we felt it was a good opportunity to remain a private company.'
The deal will allow an investor group comprised of Madison Dearborn Partners LLC, Cornerstone Equity Investors LLC, Beecken Petty O'Keefe & Company to exit immediately.
That group purchased a majority interest in Team Health in 1999 but wanted to move on, Massingale said. That was one reason the company considered going public.
Massingale said Blackstone would give Team Health new opportunities for growth through strategic relationships and acquisitions. Blackstone's Private Equity Group has invested in about 90 companies, with current holdings including Allied Waste, Celanese, TRW Automotive, and Universal Orlando. It manages $14 billion through five funds and its target investment is $100 million to $400 million, although it will go outside that range 'on an opportunistic basis,' according to its Web site.
Blackstone has a reputation of being a 'credible, high-quality global investment firm' that has the ability to fund significant acquisitions without having to raise additional money, he said. The global investment and advisory firm also is interested in investing in healthcare.
'We believe that's a good thing for us,' Massingale said. Team Health's corporate headquarters will remain in Knoxville at its Winston Road location. It is consolidating four other administrative offices located throughout West Knoxville to 30,000 square feet in CenterPoint Park off Pellissippi Parkway.
Neil P. Simpkins, senior managing director of The Blackstone Group, said in a press release that the partnership would allow Team Health to continue to provide high-quality health-care services across the country.
'Dr. Lynn Massingale and his management team have built an extraordinary company that serves the many needs of hospitals and physicians. We look forward to helping the company continue to grow and to achieve its strategic goals,' Simpkins said. Team Health was founded 25 years ago to provide emergency department administrative and staffing services to two area hospitals. Despite its current size, Massingale said Team Health only has 6 percent of the market share.
'So there's lots and lots of room for growth in our core areas,' Massingale said. 'Our goal is to continue to do that.'
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