Today, RadNet, Inc. reported that it has acquired 21 imaging facilities in Maryland, Delaware and Rhode Island, comprising the vast majority of CML HealthCare Inc.’s U.S. imaging operations. The acquisition includes the purchase of two operating subsidiaries of CML, American Radiology Services (“ARS”) and The Imaging Institute (“TII”).
The acquisition will increase RadNet’s Maryland and Delaware presence to 77 centers and will provide a foothold in Rhode Island, a market in which they hope to grow. Acquiring the ARS and TII operations is anticipated to provide approximately $70 million of annualized revenue.
ARS operates 15 free-standing outpatient imaging facilities in Maryland and one facility in Delaware. The company provides on-site staffing and professional interpretation services to five Maryland hospitals and teleradiology services to nine additional hospitals and radiology group customers. TII operates five imaging facilities throughout Rhode Island, including the Cranston, Warwick and Providence local markets. On an annualized basis, ARS and TII perform over 400,000 imaging procedures at their centers.
The purchase had an aggregate consideration of approximately $40.2 million, consisting of approximately $28.2 million in cash, $9 million in a Seller Note and approximately $3 million of assumed equipment-related debt. As part of the transaction, approximately $5.5 million of debt obligations will be assumed within the two Maryland joint ventures. Additionally, RadNet has agreed to provide certain management services involved in the operation of two additional ARS-owned imaging centers in Maryland which are expected to be sold prior to the end of the first quarter of 2012 to the Johns Hopkins Health System Corporation.
Dr. Howard Berger, RadNet’s President and CEO, remarked, “This transaction greatly strengthens our leading position in Maryland, increasing our presence in that state by 15 facilities to 61 centers. The addition of the ARS facilities to our already substantial footprint in Maryland will significantly enhance our reach into the referring physician community, position us to work in new ways with the major payors and health plans of Maryland and drive economic and operating efficiencies in this core RadNet market.”
Dr. Berger continued, “On behalf of RadNet, I welcome all of the ARS and TII employees and the American Radiology Associates and The Imaging Institute physician group members. We are excited about continuing to grow and improve these businesses both in the mid-Atlantic region and in Rhode Island. We are committed to the continued growth and consolidation of all of our core markets, and a transaction like this furthers our strategy of achieving geographic concentration, efficiencies from overall scale and the provision of high-quality multi-modality offerings.”
Dr. Berger added, “The fact that we were able to raise additional financing in a globally challenged economic environment with uncertain capital markets is indicative of the relationship we have with our existing lenders and the confidence that they have in our business and management team. We continue to be supported by a skillful team of investment banking advisors and committed lenders, and we will look to them for future capital needs and advice as we grow our business.”
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