Hg’s investment in Intelerad brings valuation to over $650 mln

The medical imaging software company's revenue has grown at 20-to-25 percent YOY since Canadian investor Novacap's 2016 investment, an exec at the firm said.

U.K. tech specialist Hg has prevailed in the auction for Intelerad Medical Systems, taking a majority stake in the highly sought-after medical imaging software company.

Hg’s investment assigns Montreal-headquartered Intelerad a total enterprise value of $650 million to $700 million, a source familiar with the matter told PE Hub.

PE Hub reported in early November that Novacap-backed Intelerad was in the early stages of its Piper Jaffray-run sales process, attracting significant private equity interest from a mix of healthcare- and tech-focused firms.

Intelerad’s existing owners, including Novacap, founders and members of management, will reinvest alongside Hg. Novacap, a buyout and growth equity firm with offices in Toronto and Montreal, is reinvesting through Novacap TMT IV Fund, out of which its initial investment was made.

“There’s a lot of gas in front of us,” François Laflamme, a senior partner at Novacap, told PE Hub. “We wanted to stick around.”

While Laflamme declined to comment on financial aspects of the deal, he said the company’s recurring revenue model and differentiated tech was viewed as highly appealing to the PE community. There’s significant opportunity ahead to continue growing Intelerad both organically and inorganically, he said: “There’s a roster of M&A that can be done.”

Intelerad in the four years since Novacap’s February 2016 investment has more than doubled its revenue, while its employee base has grown to more than 400, from 277. Its top line has grown at a rate of 20-to-25 percent year-over-year during its investment period, Laflamme added.

With a global presence spanning North America, the U.K. and Australia, Intelerad makes software that manages medical images, workflow and data.

Its various products–which include picture archiving and communication systems (PACS) as well as radiology information systems and workflow solutions–help increase productivity and improve workflow at hospitals, imaging centers and radiology groups.

Intelerad has fueled growth through M&A, acquiring Seattle’s Clario Medical in November 2018.

The acquisition of Clario, which makes a tool for radiologists’ workflow management software, is driving a lot of growth at Intelerad, a source told PE Hub in November.

Novacap’s Laflamme said growth over the last year has been phenomenal, characterizing Clarity’s product as highly scalable: “Clario was not a big company when we bought it … but in almost a year we’ve cross-selled [the product] with our existing customer base and it’s becoming our flagship product.”

Intelerad is led by CEO Paul Lepage, a longtime healthcare executive who joined the company in September 2018 from TELUS Health, a Canadian health and payments company.

For Hg, a software- and services-focused buyout firm, Intelerad joins existing healthcare-centric portfolio companies including Allocate, Evaluate, MediFox and Rhapsody.

Action Item: Check out Hg’s latest Form ADV: https://bit.ly/2tLcLHw