Radiology staffing: RadNet pays $350M cash for ONRAD in hospital market entry

RadNet Inc. has agreed to acquire ONRAD Inc. for up to $910 million, a move that marks the Los Angeles-based company's first major entry into the hospital-based staffing market. The deal combines RadNet's outpatient imaging network with ONRAD's teleradiology and professional staffing services.

The transaction structure includes $350 million in upfront cash and 5 million shares of RadNet common stock. Using the October 26 closing price of $70 per share, the equity portion is valued at approximately $350 million. An additional earnout of up to $210 million is contingent on ONRAD meeting specific earnings before interest, taxes, depreciation, and amortization targets in the coming year.

Howard Berger, chief executive of RadNet, stated that the acquisition is intended to transform the company into a full-service radiology provider. The goal is to integrate technology, professional services, and imaging operations under a single corporate structure to better serve the diagnostic needs of healthcare facilities.

Berger cited a nationwide shortage of radiology technicians as the primary driver for the purchase. He noted that health systems and joint venture partners have expressed increased demand for imaging services. A presentation to analysts indicated that nearly one-third of the 36,000 practicing radiologists in the United States are older than 55. This aging workforce coincides with rising demand for medical care driven by an older population.

ONRAD was founded in 2006 and currently employs more than 130 radiologists. The company serves over 225 hospital facilities across the country. Most of its radiologists work from home and collectively review approximately 8,000 images daily.

RadNet currently operates 442 imaging centers, making it the largest owned and operated outpatient radiology network in the nation. The company generated roughly $2 billion in revenue last year. The acquisition will expand its operational footprint into hospital-based care, urgent care facilities, and freestanding emergency departments.