AMN Healthcare to Buy Interpreting Provider Stratus Video for USD 475 Million

Three and a half years after LanguageLine sold to customer service conglomerate Teleperformance, another large US interpreting company is being acquired by a company from outside the language industry. On January 29, San Diego-based AMN Healthcare Services announced a definitive agreement to acquire Stratus Video. The deal is expected to close by early March 2020.

Florida-based Stratus Video was owned by private equity firm Kinderhook and, in mid-2019, merged with rival InDemand Interpreting. Through the merger, the company expanded to USD 100m in 2019 annual revenue. Combined headcount is around 1,500 employees.

According to AMN, “Stratus employs a network of more than 3,000 interpreters with an on-shore / off-shore staffing model.” Based on fourth quarter 2019 results (which include InDemand), Stratus Video’s ”twelve-month annualized run rate was approximately USD 119 million of revenue and USD 34 million of adjusted EBITDA.”

The acquisition does not come cheap. AMN will pay USD 475m for Stratus Video, funding the transaction through a combination of borrowings under their existing credit facility and cash on hand.

At 3.9x revenue and 13.9x adjusted EBITDA, the pricing is in line with the 2016 LanguageLine transaction (3.8x and 10x, respectively), setting a potential benchmark for future transactions.

With LanguageLine and Stratus Video now owned by bigger conglomerates, CyraCom will be left as the largest independent remote interpreting provider, by far.

AMN Healthcare Services has been growing fast over the past few years, increasing revenues from USD 1bn in 2014 to USD 2.1bn in 2018. Growth slowed in 2019 and the company is expected to end the year at around USD 2.2bn. Founded in 1997, AMN went public in 2001 and has a current market capitalization of USD 3.1bn.

AMN started as a company providing travel-nurse staffing services but has since expanded into various adjacent businesses. In a Q3 2019 investor update, the company broke down its main business lines: 63% of revenues are generated from Nurse & Allied Solutions (such as short- and long-term travel and local staffing); 15% from so-called Locum Tenens solutions (placement of physicians, advanced practice clinicians, and dentists throughout the US, etc.); and 22% from other Workforce Solutions (such as interim and permanent executive leadership and physician placement, recruitment process outsourcing, and other related services).

Adding language capabilities makes sense to AMN given their business portfolio. In the announcement, AMN said that Stratus “will provide further opportunity for us to expand in the virtual workforce and patient care arena.”

Furthermore, AMN says that “qualified healthcare interpretation, which is mandated by federal and many state regulations, is a service that many healthcare organizations do not have the resources to provide for themselves.”

This may be true for thousands of small to mid-sized healthcare organizations. But, as Meredith Stegall, Language Services Director at Dallas-based Parkland Memorial Hospital, pointed out at SlatorCon San Francisco 2019, once an organization reaches a certain size, a strong case can be made for insourcing and building an internal language services unit.

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AMN will host an analyst presentation on the acquisition on January 30, 2020 and Slator will provide an update if additional relevant information is disclosed.