Mednax Inc. said Tuesday it agreed to buy Virtual Radiologic Corp. (vRad) in a deal valued at $500 million. The seller was Providence Equity Partners. Eden Prairie, Minnesota-basd vRad is radiology physician services and telemedicine company. vRad’s current management team will remain with the company as part of Mednax. Credit Suisse provided financial advice to vRad while Kirkland & Ellis LLP was their law firm. McDermott, Will & Emery acted as legal advisor to Mednax.
FORT LAUDERDALE, Fla.–(BUSINESS WIRE)–May 12, 2015– MEDNAX, Inc. (NYSE: MD), the national medical group specializing in neonatal, anesthesia, maternal-fetal, pediatric cardiology and other pediatric physician services, today announced the signing of a definitive agreement to acquire Virtual Radiologic Corporation(vRad), the leading radiology physician services and telemedicine company, for $500 million.
“We believe vRad is an excellent platform for growth in teleradiology and the broader telemedicine market,” said Roger J. Medel, M.D., Chief Executive Officer of MEDNAX. “Radiology is a large, fragmented industry with total revenue of roughly $18 billion, and it is evolving rapidly to include teleradiology as an economic and clinical necessity for customers. We believe the opportunities for organic growth at vRad and for cross-selling between the company’s and MEDNAX’s customer bases are compelling. This acquisition also further broadens the scope of services we can provide to our hospital partners. Finally, vRad’s extensive investments in information technology and data analytics align well with our own commitment to improving both the quality and cost effectiveness of care.”
vRad currently generates annual revenue of roughly $185 million through its network of more than 350 U.S.-board certified and eligible radiologists, more than 75 percent of whom are subspecialty trained. The company reads and interprets more than five million diagnostic imaging studies annually, which are included in vRad’s proprietary picture archiving and communication system (PACS).
The company provides radiology coverage to over 2,100 healthcare facilities across all 50 states and internationally. vRad’s proprietary technology and workflow platform, extensive database, and analytic capabilities enable real-time distribution of studies to appropriately trained, licensed and credentialed physicians in order to improve clinical outcomes, increase speed of diagnosis and reduce the cost of care.
vRad’s current management team will remain with the company as part of MEDNAX.
“We are excited at the opportunity to join a company founded and built by physicians, and we share MEDNAX’s commitment to providing the highest quality care,” said Jim Burke, Chief Executive Officer of vRad. “Our executive management, medical leadership, physicians and team members all look forward to joiningMEDNAX. vRad is proud to be recognized as a leader in radiology, an innovator in healthcare informatics, and a pioneer in telemedicine. Together with MEDNAX, we can offer our patients and hospital partners a broad array of services, now including access to an expanding national network of critical subspecialty expertise and support. This transaction is a testament to the strength of the vRad clinical and business model, and underscores the value of the vRad organization today, and for the future.”
The transaction is expected to be completed during the second quarter of 2015. This is a cash transaction, and it is expected to be accretive to earnings, including interest and non-cash amortization expense.
Additional information and conference call
MEDNAX, Inc., has provided additional information about the transaction, which may be accessed from the Company’s Website, www.mednax.com.
The Company will host an investor conference call to discuss the transaction at 9 a.m., E.D.T. today. Those wishing to participate can do so by dialing 800.288.8975, access Code 360181, or through the conference call Webcast, which may also be accessed through the Company’s Website. A telephone replay of the conference call will be available from 11 a.m., E.D.T. today through midnight E.D.T. May 16, 2015 by dialing 800.475.6701, access Code 360181. The replay will also be available at www.mednax.com.
vRad (Virtual Radiologic) is a leading outsourced radiology physician services and telemedicine company with over 350 U.S. board-certified and eligible physicians, 75% of whom are subspecialty trained. The company interprets over 5 million patient studies annually—and processes over 1.2 billion images on the world’s biggest and most advanced teleradiology PACS— for its 2,100+ client hospital, health system and radiology group facilities. A winner of Frost & Sullivan’s Visionary Innovation Award for Medical Imaging Analytics (North America) and a leader in imaging analytics, vRad provides access to the only radiology patient care benchmarking platform (vRad RPCSM Index) with 31 million+ normalized imaging studies, growing at 400,000 per month. vRad’s clinical expertise and evidence-based insight help clients make better decisions for the health of their patients and their imaging services. For more information about the company, including vRad’s 2014 Frost & Sullivan Best Practices Award, please visit www.vrad.com.
MEDNAX, Inc. is a national medical group comprised of the nation’s leading providers of neonatal, anesthesia, maternal-fetal and pediatric physician subspecialty services. Physicians and advanced practitioners practicing as part of MEDNAX are reshaping the delivery of care within their specialties and subspecialties, using evidence-based tools, continuous quality initiatives and clinical research to enhance patient outcomes and provide high-quality, cost-effective care. Pediatrix Medical Group, a division ofMEDNAX, was founded in 1979 and includes neonatal physicians who provide services at more than 370 neonatal intensive care units, and collaborate with affiliated maternal-fetal medicine, pediatric cardiology, pediatric critical care and other physician subspecialists to provide a clinical care continuum. Pediatrix is also the nation’s largest provider of newborn hearing screens. American Anesthesiology, a division of MEDNAX, was established in 2007 and includes more than 2,400 anesthesiologists and advanced practitioners who provide anesthesia care to patients in connection with surgical and other procedures as well as pain management. MEDNAX, through its affiliated professional corporations, employs more than 2,675 physicians in 34 states and Puerto Rico. In addition to its national physician network, MEDNAX provides services to medical providers in over 40 states through two complementary businesses, consisting of a revenue cycle management company and a consulting services company. Additional information is available at www.mednax.com.
Certain statements and information in this press release may be deemed to contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, and all statements, other than statements of historical facts, that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future. These statements are often characterized by terminology such as “believe”, “hope”, “may”, “anticipate”, “should”, “intend”, “plan”, “will”, “expect”, “estimate”, “project”, “positioned”, “strategy” and similar expressions, and are based on assumptions and assessments made by MEDNAX’s management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Any forward-looking statements in this press release are made as of the date hereof, and MEDNAX undertakes no duty to update or revise any such statements, whether as a result of new information, future events or otherwise. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Important factors that could cause actual results, developments, and business decisions to differ materially from forward-looking statements are described in MEDNAX’s most recent Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q, including the sections entitled “Risk Factors”, as well as MEDNAX’s current reports on Form 8-K, filed with theSecurities and Exchange Commission.