MEDNAX Buys Radiology Specialists to Expand Business

MEDNAX, Inc. MD has acquired Radiology Specialists, a private radiology physician group based in Las Vegas.

Radio Specialists consists of 25 board certified and fellowship trained physicians. It provides a broad range of diagnostic and interventional radiology services including body imaging, neuroradiology, musculoskeletal imaging, cardiac imaging, breast imaging, pediatric radiology, nuclear medicine and image guided therapy.

With this deal, MEDNAX has bought the seventh radiology services practice and the first in the state of Nevada. Upon completion of the transaction, MEDNAX’s affiliated radiologists will read more than 11.5 million studies annually.

MEDNAX funded this all-cash deal, which is expected to be immediately accretive to earnings.

With this acquisition, six physician group practices became part of MEDNAX in 2018.

The purchase will further solidify MEDNAX Radiology Solutions as a recognized leader in radiology, an innovator in health care informatics and a pioneer in telemedicine.

Radiology represents $18 billion of annual U.S. revenues, providing immense growth potential. The industry widely witnesses small-scale consolidations and there is dearth of a national player with more than 3% market share.

The Radiology market stands to benefit significantly from advances in technology and analytics. As larger groups look to enhance their practices with MSO offerings, radiology is becoming more important in driving patient outcomes and augmenting population health.

MEDNAX has been actively seeking acquisitions for accelerated growth. One of the notable acquisitions made by the company was that of vRad, which helped the company expand its suite of services in telemedicine.  

The company aims at inking buyout deals to purchase physicians’ practices group and complementary service businesses. During the first quarter of 2018, MEDNAX completed the buyout of four physician group practices including one radiology practice, one neonatology practice and two pediatric subspecialty practices. This helped the company extend its national network of physician practices.

In a year’s time, the stock has gained 6%, underperforming the industry’s growth of 43%.

 

The first half of 2018 logged almost double revenues from the radiology organization, mainly driven by accretive acquisitions. In the first half of this year, MEDNAX’s revenue growth attributable to integrations was 4.5%. Though the company commented that it would not complete additional acquisitions within 2018, the existing ones should contribute to its revenue rise.

MEDNAX carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the healthcare space are HCA Healthcare Inc. HCA, Tenet Healthcare Corp. THC and United Health Group Inc. UNH, each stock holding a Zacks Rank #2 (Buy). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

While both Tenet Healthcare and UnitedHealth Group beat estimates in each of the trailing four quarters with an average positive surprise of 779.3% and 3.7%, HCA Healthcare exceeded the same in three of the preceding four quarters with an average beat of 8.2%.

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