Employment Firm Making Career Out of Pickups

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When On Assignment Inc. bought a physician staffing firm last week, it took another step on the staffing company’s five-year plan to build its revenue to $1 billion a year, double what it takes in now.

The Calabasas company, which places health care and engineering professionals in hospitals and companies, acquired HealthCare Partners Inc., a privately held physician staffing firm in Atlanta, for $15 million.

HCP will become a part of On Assignment’s physician unit, Salt Lake City-based Vista Staffing Solutions, which On Assignment acquired in 2007. HCP’s founders are expected to stay with the company.

On Assignment has 1,123 employees and operates 90 branch offices around the world. The 41-employee HCP makes physician placements across 24 states.

Vista reported revenue of $73.6 million last year, about 17 percent of the parent company’s total. HCP had $20 million in revenue last year, and On Assignment expects the combination of the two companies will accelerate growth.

“With this acquisition, Vista now generates more than $100 million in annual revenue,” said Peter Dameris, On Assignment chief executive.

The company also expects savings of about $450,000 a year for the next 15 years through a tax classification of the acquisition.

The purchase adds to On Assignment’s repertoire, as HCP does different types of medical staffing than Vista.

“This is a good acquisition in terms of a geographic and staffing specialty perspective,” said Tobey Sommer, an analyst at SunTrust Robinson Humphrey Inc. in Nashville, Tenn., who follows On Assignment. “HCP has a different specialty in the physician staffing industry and a strong business in the southeast area.”

The deal includes a two-year earn-out opportunity of up to $3.7 million for HCP’s owners. On Assignment will use a combination of cash on hand and borrowing to pay for the acquisition.

Many pickups

HCP is On Assignment’s 10th acquisition since 1996 and the fourth since last year, when On Assignment announced a five-year growth strategy to reach $1 billion in revenue. Revenue last year was $438 million.

“As part of our five-year strategic plan, we plan to acquire about $50 million in revenue a year,” said James L. Brill, the company’s senior vice president and chief financial officer.

On Assignment was incorporated in 1985 and began buying up other companies in 1996. Among those acquisitions was the 1998 pickup of LabStaffers Inc., which boosted On Assignment’s life sciences business. On Assignment then bought Health Personnel Options Corp. in 2002 to establish a traveling-nurse staffing service.

In 2007, the same year as the acquisition of Vista, the company bought Oxford and established its IT and engineering business.

In 2009, the company bought Fox Hill & Associates, a physician placement business specializing in retained and contingent search.

Last year, it bought Cambridge Group Ltd., a Connecticut-based firm specializing in clinical research, IT and physician staffing, and London’s Sharpstream Holdings Ltd., a provider of executive search services in life sciences.

Earlier this year, the company acquired Valesta, a Belgian provider of clinical research staffing.

On Assignment reported second quarter net income of $5.9 million, compared with net income of $900,000 the previous year. Revenue rose 38 percent to $143 million.

But revenue in its physician staffing unit was down nearly 8 percent from the same quarter last year.

More acquisitions could offset slowing growth in the company’s physician staffing unit, analysts said.

“While revenue guidance for the third quarter of 2011 implies slightly slowing growth, this could be muted by potential new acquisitions,” said Jeffrey M. Silber, a managing director of BMO Capital Markets Corp. in New York who raised On Assignment’s target price from $13 to $14 last week. Shares closed at $10.09 on Aug. 3.