National physician staffing firm Mednax announced the sale of its radiology practice—which includes teleradiology company Virtual Radiologic, known as vRad—to venture-backed Radiology Partners for $885M.
Publicly-traded Mednax has been hit hard by both contracting disputes with UnitedHealthcare, as well as pandemic-related volume declines. Both its anesthesiology and radiology businesses suffered big losses with the halt of elective procedures in the spring, and saw volumes decline between 50-70 percent compared to the prior year.
The company began divesting in May with the sale of its anesthesiology division to investor-backed North American Partners in Anesthesia. Mednax leaders say these decisions to sell were made independent of the pandemic, and that they have been planning to return to the company’s roots of focusing exclusively on obstetrics and pediatric subspecialty care, including changing its name back to Pediatrix.
Acquiring firm Radiology Partners is the largest radiology practice in the country, working with 1,300 hospitals and healthcare facilities. With this acquisition, it will have 2,400 radiologists practicing in all 50 states and the District of Columbia.
Hospital-based physician staffing firms have been especially hard hit by COVID-induced volume declines. This has created a softening in valuations and opened the door for investment firms to accelerate practice purchases.
We expect the pace of deals to quicken as independent practices experience continued financial strain—with large national groups leading the way, taking advantage of lower practice prices to build large-scale specialty enterprises.