Cranemere buys OIA from ICV at $400m valuation

OIA, which creates joint ventures with health systems to build and operate outpatient imaging centers, selects a buyer in it for the long haul.

Long-life investor The Cranemere Group acquired Outpatient Imaging Affiliates from ICV Partners in a deal valued at approximately $400 million, according to two sources with knowledge of the deal terms.  

For ICV, a lower mid-market firm, the sale generated a 6x return less than four years into its investment, another person familiar with the deal told PE Hub. 

The deal, announced Wednesday, concludes a sale process conducted by Coker Capital, sources said. 

A roughly $400 million valuation indicates a strong outcome for ICV, surpassing the typical high single-digit to 10x EBITDA multiple range at which most outpatient imaging assets have tended to trade hands, sources said. 

In this case, the deal multiple varies depending on which view you take. OIA marketed $32 million of EBITDA for 2021, including acquisitions under letter of intent and pro forma adjustments, or $24 million of adjusted EBITDA, some of the sources said.

Perhaps supporting the premium valuation commanded, Cranemere is not your everyday investor. The firm invests through a permanent capital lens, taking equity stakes in US and European private businesses with a focus on business-building and a long-term strategy that aligns with founders and entrepreneurs. 

“We know that health systems with which OIA partners are focused on their mission of protecting and improving the health of their communities with a horizon of decades and generations, not quarters or years. Cranemere has the same horizon, along with a deep understanding of the healthcare industry…” OIA CEO Cannon King said in a Wednesday announcement.

Already on a nice growth track, OIA since ICV invested in March 2018 has grown the number of centers it operates to 56 locations across 18 markets, from 36 centers. EBITDA more than doubled during that period, the seller said in a Wednesday press release.

OIA differentiates via its proven partnership model, through which it creates joint ventures with health systems to build and operate outpatient imaging centers. According to Cranemere’s announcement, OIA invests equity in each project alongside its local partners, while providing development, management, marketing billing and collection services to the joint venture.” 

Its seasoned executive team along with what remains a large consolidation opportunity in the broader radiology market also appealed to participants in the sale process for OIA, sources told PE HubFrom a broader healthcare perspective, groups the likes of OIA are benefiting from another accelerating theme: the shift of care to outpatient settings.

Vincent Mai formed London-based Cranemere in 2012 as a holding company to invest in the style of Warren Buffett’s Berkshire Hathaway, holding companies indefinitely. Mai moved into the CEO post in December 2020 after Jeff Zients resigned to join the incoming administration of president-elect Joseph Biden, affiliate title Buyouts wrote. 

Cranemere’s prior healthcare experience includes Northstar Anesthesia, a national anesthesia provider it bought from TPG Growth in 2018. 

On the radiology front, other PE-backed platforms to keep tabs on include Wellspring Capital Management’s RAYUS Radiology, which last week inked its largest acquisition to date. Capturing a large bite of the attractive South Florida market, its acquisition of Diagnostic Centers of America pushed the company to approximately $140 million in EBITDA, sources told PE Hub.

An even larger asset to watch is Welsh, Carson, Anderson & Stowe-owned US Radiology Specialists, or USRS. WCAS in 2018 formed the platform in partnership with Charlotte Radiology. 

Cranemere, ICV and Coker declined to comment.