First, let's look at the overall deal. Mednax acquired vRad for $500 million in a cash transaction. This is approximately equal to 10x the EBITDA number provided by unnamed internal vRad sources for the article Newstone, Blackstone’s Credit Arm Hire Credit Suisse to Find Buyer for vRad in March, and discussed subsequently in the Diagnostic Imaging article, vRad Is For Sale. This figure surprised many and is approximately 2.5 to 3 times the amount that many insiders believed that vRad would eventually be sold for.
According to the press release by Mednax and the Dow Jones article, vRad currently generates annual revenue of $185 to $190 million. vRad is reported to have approximately 350 radiologists with customers in all 50 states.
Mednax hopes to use vRad as an entrée to the expected $3.8 billion teleradiology market as well as the broader radiology and imaging market. Mednax CEO, Roger J. Medel, MD, was quoted in the Mednax press release as saying, “We believe vRad is an excellent platform for growth in teleradiology and the broader telemedicine market.” He went on to say, “Radiology is a large, fragmented industry with total revenue of roughly $18 billion, and it is evolving rapidly to include teleradiology as an economic and clinical necessity for customers. We believe the opportunities for organic growth at vRad and for cross-selling between the company’s and MEDNAX’s customer bases are compelling. This acquisition also further broadens the scope of services we can provide to our hospital partners.”