The Federal Trade Commission has approved Radiology Partners’ $885 million acquisition of Mednax’s imaging business line, clearing the last big hurdle ahead of the deal closing.
Standard & Poor’s Global Ratings revealed the news in an update shared late Thursday. The agency noted that Rad Partners plans to fund the transaction through $650 million in new secured notes, along with cash-on-hand of $130 million, and another $150 million in equity from investors.
S&P issued a “stable” outlook for Rad Partners following the news, believing the El Segundo, California, company’s “aggressive growth strategy” will bolster its business outlook.
“The combination with Mednax Radiology Solutions increases Radiology Partners’ geographic footprint and increases density in existing markets,” the agency noted. “We believe the increased scale should improve operating efficiency and lead to margin improvement as well as improve its negotiating position with third-party payers.”
Florida-based Mednax first announced its intent to exit radiology back in June, pivoting to focus on pediatrics, and leaders revealed Rad Partners as the buyer in September. In an interview with Radiology Business at the time, RP chief executive Rich Whitney labeled FTC approval as “the only significant closing condition” that could derail the deal.
S&P cautioned Thursday that business risks still remain from the pandemic. Both Mednax and Rad Partners suffered sizable volume declines in the second quarter, though traffic began to rebound by Q3. The positive outlook for RP also reflects Standard & Poor’s view that “the company has enough liquidity to weather the operational challenges created by the pandemic.”
“Radiology Partners has been aggressively acquiring companies over the past several years, and we expect it will continue to require debt as the major source of funding for additional acquisitions, keeping it highly leveraged,” S&P added.
In a statement shared Dec. 4, Whitney said he was "pleased to have reached this exciting milestone," noting that he expects to close the transaction by the end of December.
"We look forward to welcoming hundreds of Mednax and vRad radiologists and support teammates to the RP family," he told Radiology Business.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.