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WCAS inks $250 mln deal for American Health Imaging

Welsh, Carson, Anderson & Stowe acquired American Health Imaging in a transaction valuing the network of diagnostic imaging centers at approximately $250 million, Buyouts has learned.

Healthcare-focused WCAS purchased AHI through US Radiology Specialists, which it formed in April 2018 in partnership with Charlotte Radiology, a Charlotte, North Carolina, physician-owned radiology group.

AHI Founder and CEO Scott Arant will roll over a substantial minority investment in the company, one of the people said.

At approximately $250 million, the transaction equates to about 10x the company’s $25 million in Ebitda, another person added.

The deal comes several months after AHI retained SunTrust Robinson Humphrey for financial advice on a potential sale, with a formal process having kicked off in mid-2018, the people said.

WCAS as a result of that process was ultimately selected as a finalist in the spring of 2019; however, AHI required extended discussions to move forward with a transaction, one of the people said. WCAS ultimately came back with a revised offer later this year to rehash a deal, the person said.

Founded in 1998, AHI provides imaging services including MRIs, CT scans, ultrasounds and digital radiography across its 29 locations throughout Georgia, Texas, Florida and Alabama, according to its website.

For WCAS’s US Radiology, the deal aligns with its hybrid model, as the platform has expanded through the addition of both radiology practice partnerships and outpatient imaging centers.

Part of the attractiveness of AHI, one person noted, is the paucity of scale assets available for investment. Many imaging centers are embedded within radiology practice groups, providing AHI with the benefit of scarcity value, the person said.

One of few large industry consolidators is the Center for Diagnostic Imaging, which concluded its Jefferies-run sales process earlier this year via a sale to Wellspring Capital Management.

Terms weren’t disclosed, but a source told Buyouts the deal valued CDI at a high single-digit multiple of Ebitda, suggesting a valuation a little south of $750 million based upon its $75 million in adjusted 2018 Ebitda.

Wellspring’s investment marked an exit for Black Diamond Capital Management.

Radiology Partners, another well-known consolidator, deems itself the largest physician-led and physician-owned radiology practice in the U.S.

WCAS has a long track record of investment in outpatient healthcare providers, with past investments in companies such as United Surgical Partners International and US Anesthesia.

Elsewhere, WCAS in July invested alongside Walgreen Co. in Shields Health Solutions, a specialty pharmacy integrator and care provider.

AHI and WCAS declined to comment.

Action Item: Check out WCAS’ latest Form ADV: https://bit.ly/2m2p3Hf