October 22, 2018 / 7:58 PM / 22 days ago

Medical transport company Providence Service explores sale - sources

(Reuters) - Providence Service Corp (PRSC.O), the largest provider of non-emergency medical transportation services in the United States, is exploring a sale after attracting interest from private equity firms, three people familiar with the matter said on Monday.

The acquisition interest in Providence Service offers the latest example of the appeal of the healthcare industry for private equity, as an ageing population and a rise in chronic diseases fuel a boom in healthcare spending.

Providence Service, whose subsidiary LogistiCare LLC helps organise and manage the trips of patients to their doctors, is working with an investment bank as it negotiates with potential acquirers, the sources said.

The sources cautioned that no deal was certain and asked not to be identified because the matter is confidential. A Providence Service spokesman did not immediately respond to a request for comment.

Providence Service shares ended trading on Monday up 7 percent at $69.01 on the news, giving the company a market capitalisation of $823 million (£634.4 million).

Founded in 1997 and based in Stamford, Connecticut, Providence Service provides services ranging from non-emergency medical transportation to operating government sponsored workforce development programs.

After seeing its stock price surge for much of 2017, shares of Providence Service have dipped in recent months, in part because of rising costs in its medical transportation business.

Providence Service also saw a drop in earnings in the most recent quarter, as more restrictive hospital networks and increasing opiate-overdose-related trips have required more uses of its ambulances and longer drives, pushing up costs.

There has been a wave of private equity dealmaking in the health insurance sector. Late last year, health insurer Humana Inc (HUM.N), in partnership with two private equity firms, acquired home care provider Kindred Healthcare Inc for around $810 million.

In June, private equity firm KKR & Co Inc (KKR.N) agreed to acquire Envision Healthcare Corp EVHC.N, one of the biggest U.S. providers of physicians to hospitals, in a deal valued at $5.6 billion.

Earlier this month, Reuters reported that Civitas Solutions Inc (CIVI.N), a U.S. provider of home and community health services to people with disabilities, is exploring strategic alternatives, including a sale.

Acadia Healthcare Co Inc (ACHC.O), a U.S. operator of behavioural health centres, is also in talks with private equity firms about selling itself after attracting buyout interest, Reuters reported last week.

Reporting by Carl O'Donnell and Joshua Franklin in New York, Editing by Rosalba O'Brien and Phil Berlowitz

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