In a deal that would create a behemoth in the teleradiology services market, Virtual Radiologic has inked a definitive agreement to purchase fellow teleradiology services provider NightHawk Radiology Services for approximately $170 million in cash.
If completed, the acquisition would bring together the two dominant firms in the teleradiology services sector. In announcing the deal, the companies said they believe that a combined entity would be able to offer enhanced services to U.S. radiology groups and hospitals, as well as expand access to subspecialty radiology expertise.
"An important benefit to our clients is that the combined company will have a much deeper roster of subspecialists, which will enhance our ability to deliver the highest quality care possible," Virtual Radiologic president and CEO Rob Kill told AuntMinnie.com.
The combined firm would have 325 affiliated radiologists serving nearly 2,700 U.S. healthcare facilities across all 50 states and reading approximately 6 million studies a year, according to Virtual Radiologic of Eden Prairie, MN, and NightHawk of Scottsdale, AZ. Of the affiliated radiologists, more than 75% will be fellowship-trained subspecialists.
The deal calls for Virtual Radiologic to purchase all of NightHawk's outstanding common stock for $6.50 per share in cash, a premium of 100% over NightHawk's last closing stock price of $3.25 per share.
In May, NightHawk released what it called its "Rules of Engagement," indicating that it would not engage in what some believe to be "predatory practices" by teleradiology services firms. When asked if the combined company would continue to abide by this policy, Kill said that Virtual Radiologic has been very consistent in partnering with local radiology practices, not competing with them.
"We will continue to serve our customers in a collaborative fashion with a focus on delivering the highest quality care possible, supported by excellent service," he said.
Rob Kill will continue to serve as president and CEO of the combined firm. NightHawk President and CEO David Engert will remain as a board advisor following the transaction. Management teams from both companies will contribute to the remainder of the leadership team, according to the firms.
The deal is expected to close in the first quarter of 2011, subject to customary conditions and the approval of NightHawk's stockholders.
In support of the transaction, a commitment for a senior secured credit facility for the deal was provided by GE Capital's Healthcare Financial Services division. Morgan Stanley is serving as financial advisor.
By Erik L. Ridley
AuntMinnie.com staff writer
September 27, 2010
Related Reading
Report: Remote radiology market is active, fragmented, September 14, 2010
Virtual Radiologic forms NY alliance, August 30, 2010
NightHawk debuts peer-review program, August 12, 2010
NightHawk revenue slips in Q2, August 9, 2010
Virtual Radiologic inks La. deal, July 22, 2010
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