par John R. Fischer
, Senior Reporter | September 14, 2020
Radiology Partners (RP) is set to put forth a total cash consideration of approximately $885 million for the purchase of MEDNAX Radiology Solutions, a division of MEDNAX.
Approved unanimously by both companies’ boards of directors, the deal would provide RP with more access to subspecialty care, as well as teleradiology services offered by MEDNAX.
“We believe the benefits of increased scale, paired with local practice autonomy and physician leadership, will allow us to continue to advance patient care, improve clinical value and ultimately transform radiology,” said Rich Whitney, chief executive officer of Radiology Partners, in a statement.
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Founded in 2015, MEDNAX Radiology Solutions equips hospitals, clinics, imaging centers and referring physicians with on-the-ground and in-the-cloud radiology services that are used to interpret 11.8 million exams annually for millions of individual patients. This is done through a combination of physicians groups and vRAD, a U.S. teleradiology organization under MEDNAX.
The company announced its intention to sell
its radiology business back in June, having been planning to do so prior to the COVID-19 pandemic. The divestiture is part of a restructuring plan being undertaken by MEDNAX, which includes a return to its previous name, Pediatrix Medical Group. Following discussions with several parties, the organization chose RP, which was founded in 2012 and employs approximately 1,600 radiologists who provide services to nearly 1,300 hospitals, clinics and imaging centers across 26 states.
The acquisition is expected to increase the capabilities needed for conducting large-scale clinical programs that create value and reduce cost across RP practices. Patients and clients would have access to more subspecialty offerings, and there would be more opportunities to develop and elevate radiologist leaders.
MEDNAX Radiology Solutions brings to RP more than 300 onsite radiologists who serve patients primarily in Connecticut, Florida, Nevada, Tennessee and Texas, and more than 500 teleradiologists who work with patients in all 50 states. The combined organization, which will operate under the Radiology Partners name, will consist of more than 2,400 radiology physicians who provide services across all 50 states and the District of Columbia.
“This transaction will enable MEDNAX to return to our core Pediatrix and Obstetrix medical groups,” Mark Ordan, chief executive officer of MEDNAX, which provides maternal-fetal, newborn and pediatric subspecialty care, said in a statement. “We believe our dedication of resources and focus on the clinical services our company provides to women and children is best for all stakeholders. We believe this transaction will also enable increased efficiency and a path for solid growth.”
MEDNAX does not anticipate there to be any material tax impact on the proceeds of the acquisition. The proceeds will go toward its debt, which, as of September 1, 2020, totals $1.75 billion and consists solely of its senior notes and cash on hand of approximately $260 million. This brings its net debt to approximately $1.49 billion.
Pending the closing of the transaction, MEDNAX will report operating results of MEDNAX Radiology Solutions as discontinued operations.
The transaction is expected to close in the fourth quarter of 2020 and is subject to customary closing conditions, including regulatory review.