Mednax Inc. (NYSE: MD) continues to consolidate, purchasing radiology firm vRad for $500 million. The Sunrise, Florida-based medical network, known for scooping up various medical specialty practices, expects to close the deal in the second quarter.
Short for Virtual Radiologic, vRad provides x-ray and ultrasound services. The company, which has 350 physicians, interprets more than 5 million patient studies annually. Its executive team will join Mednax but remain based in Eden Prairie, Minnesota.
Mednax CEO Roger Medel says the deal will grow the company's offerings to hospital partners. The transaction underscores how physician groups have been eager to consolidate as the Affordable Care Act brings more patients into the U.S. health care system. (For more, see ACA Reshuffles the Deck and 5 Technologies That Drove Health Care M&A in 2014.)
Medical-care providers are teaming up all over the health care industry to reduce costs and to strengthen their negotiating positions with insurance firms such as Aetna Inc. (NYSE: AET). The trend is particularly evident in the fields of radiology and anesthesiology, in which smaller groups are realizing the benefits of bigger buyers for their collective bargaining power.
AmSurg Corp. (Nasdaq: AMSG) is also bulking up with outsourced physician services. The company bought Radiology Associates of Hollywood PA in March.
Mednax, which also focuses on neonatal and maternal-fetal subspecialty services, spent $490 million on acquisitions in 2014. The company has been eager to buy in 2015 as well. In March, it bought Mosaic Anesthesia & Perioperative Services PC and, before that, bought Memac Associates PC, a Michigan anesthesiology practice in January.
Credit Suisse Securities advised vRad on the transaction with Mednax, while Kirkland & Ellis LLP provided legal counsel.