MEDNAX, Inc. has announced the acquisition of Virtual Radiologic Corporation (vRad), a radiology physician services and telemedicine company, for $500 million. The deal is scheduled to close during the second quarter of 2015.

“We believe vRad is an excellent platform for growth in teleradiology and the broader telemedicine market,” MEDNAX CEO Roger J. Medel, MD, said in a statement. “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.”

vRad CEO Jim Burke is also excited about the possibilities now that the two companies are working together.

“Together with MEDNAX, we can offer our patients and hospital partners a broad array of services, now including access to an expanding national network of critical subspecialty expertise and support,” Burke said in a statement. “This transaction is a testament to the strength of the vRad clinical and business model, and underscores the value of the vRad organization today, and for the future.”

With the deal, MEDNAX gains a company that generates approximately $185 million in revenue through a network of more than 350 radiologists. vRad reads more than five million imaging studies a year.

Mednax, South Florida’s 17th-largest public company, focuses on neonatal, anesthesia, maternal-fetal and pediatric physician subspecialty services. It acquired eight anesthesiology practices, three pediatrics practices, a medical billing company and a consulting firm in 2014, spending $490 million on acquisitions.
The company reported $2.44 billion in 2014 revenue, up from $2.15 billion in 2013.

Credit Suisse Securities is vRad’s financial adviser on the deal, and Kirkland & Ellis LLP is its legal counsel.

After the deal, vRad’s headquarters and daily operations will remain in Eden Prairie, Minn.