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Envision Healthcare Makes Organizational Changes, Here's Why

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Envision Healthcare Corp. (EVHC - Free Report) has announced organizational changes, which include a realignment of its top brass and a stock repurchase plan.

These changes are aimed at bolstering its leadership team as it transitions from an operator of ambulatory surgery services to a leading diversified healthcare services organization.

The company announced succession plans for current CFO Claire Gulmi and the President of Physician Services, Bob Coward.

Gulmi will be succeeded by Kevin Eastridge, currently the Chief Accounting Officer. Coward’s responsibility will be taken over by Brian Jackson, who is presently Chief Operating Officer for the Physician Services Group.

The company also created a new role, Executive Vice President and Chief Operating Officer, to be held by Karey Witty who will report to CEO Chris Holden. Also, Kevin Eastridge (current Chief Accounting Officer) will be appointed CFO, effective Oct 2, although Gulmi will remain an advisor to the company for a year to assist in the transition.

The new leadership comprising seasoned healthcare executives with vast experience is expected to steer the company to new heights.

The company also authorized a program to repurchase up to $250 million of its common stock. This buyback represents nearly 4% of the company’s current market capitalization.

Envision Healthcare is rapidly transforming its business after its merger with AMSURG last December. The merger created the nation's largest physician-staffing company, with more than 19,000 physicians and clinicians and annual revenues of more than $10 billion.

The company is now focusing on expanding its core business of physician services. In this vein, it recently announced that it will divest its medical transportation business, known as American Medical Response, to KKR & Co. in an all-cash deal valued at $2.4 billion.

Year to date, the stock has lost 32% significantly underperforming the decline of 4% suffered by the industry it belongs to. We believe these transformational steps will address investors’ concern to some extent regarding the stock’s underperformance.

These developments mark significant steps in building the new Envision Healthcare  around a set of physician-centric clinical solutions to better serve the hospital system and payer clients.

The merger and related transformation is expected to enhance overall growth at Envision Healthcare and evolve it into a better company with a superior return on capital trajectory.

Envision Healthcare caries a Zacks Rank #3 (Hold). Some better-ranked stocks from the medical sector are Aetna Inc. (AET - Free Report) , Centene Corp. (CNC - Free Report) and WellCare Health Plans, Inc. (WCG - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Aetna surpassed earnings estimates in each of the trailing four quarters, with an average positive surprise of 19%.

Centene delivered positive earnings surprises in three of the last four quarters, with an average beat of 7.7%.

WellCare Health topped earnings estimates in each of the last four quarters, with an average positive surprise of 47.4%.

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