RadNet Acquires PACS Vendor

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RadNet, Inc, which operates 191 fixed-site imaging centers in six U.S. states, has executed a definitive agreement to acquire eRAD, Inc parent company Image Medical Corp. for $10.75 million. eRAD provides PACS and related workflow solutions to more than 250 hospitals, teleradiology businesses, imaging centers and specialty physician groups.

Howard Berger"Entering the radiology software business is a significant event for RadNet and a natural extension of our core competencies,” said RadNet CEO Howard G. Berger, MD, in a September 14 conference call. “We have always been on the leading edge with respect to using technology to manage our own business, both within our facilities and within our affiliated radiology groups. The systems we use are essential to our ability to accurately create, process and distribute data and run our business cost effectively. Up to this point, our revenue has been earned exclusively through our owned and operated facilities. With today's announcement, we have positioned ourselves to sell products and services to the over 6,000 freestanding imaging centers and the 10,000 imaging operations within community hospitals across the U.S. that we do not own.”

Ranjan Jayanathan, RadNet’s CIO and general manager of its newly created Radiology Information Technology division, concurs. He told imagingBiz the transaction puts RadNet in an ideal position to reap significant benefits in terms of margins, which he deemed clearly higher in PACS than in outpatient imaging.

Jayanathan says the acquisition is initially expected to yield RadNet approximately $5 million in revenues annually, along with $20 million in yearly savings through the elimination of software licensing, support and maintenance fees currently paid to other entities. He does not foresee any difficulty in marketing to RadNet’s competitors given anticipated additions to eRAD’s product portfolio. To be developed under the auspices of RadNet’s Radiology Information Technology division, these will center around specialty reading, teleradiology and remote reading.

“Product development will evolve with our own needs, and as it does, so will the appeal to the market at large,” Jayanathan stated. RadNet currently holds 3% of the market for outpatient imaging, with plenty of room for growth, he observed.

During the conference call, Roy Miller, PhD, eRAD’s president and CEO, observed that its customers and suppliers will experience seamless continuity in product development, support and ongoing relationships following the completion of the acquisition. “Culturally and strategically“, he concluded, “this business combination is truly an excellent fit."