RadNet (NASDAQ:RDNT) said it has signed a definitive agreement to acquire teleradiology and hospital radiology-services provider ONRAD Inc. in a transaction designed to establish a third operating segment focused on radiology professional services.
The initial consideration includes $350 million in cash and 5 million shares of RadNet common stock. The deal also includes a potential earn-out of up to $210 million, payable in cash and/or stock at RadNet’s election, based on ONRAD’s adjusted EBITDA in 2027.
RadNet expects ONRAD to contribute $190 million to $200 million in annual revenue and $60 million to $65 million in adjusted EBITDA during its first full year under RadNet. The company said ONRAD’s projected revenue growth is expected to exceed 10%.
Expanding into hospital radiology staffing
Howard Berger, RadNet’s president and chief executive officer, said the transaction responds to demand from hospital and health-system partners for help addressing shortages of radiologists and rising imaging volumes.
“The inbound calls from hospitals was not about necessarily our AI tools, not about joint venturing and outpatient solutions, but how can we help them solve their most critical problem now, and that is radiology interpretations and radiology staffing,” Berger said.
ONRAD provides remote diagnostic interpretations and full-service radiology operations for hospitals. Dave Engert, ONRAD’s chief executive officer, said the company has more than 130 radiologists and can complete more than 8,000 final interpretations per day. It serves 225 hospital facilities and operates across 26 states, according to Engert.
The company’s teleradiology operation represents roughly 80% of its revenue, while full-service hospital radiology operations account for about 20%. Its full-service offering can include on-site interventional radiology, mammography, diagnostic radiology, billing, revenue-cycle management, operational support, quality assurance and remote reading coverage.
Engert said ONRAD has focused on hospitals and acute-care environments rather than trying to operate nationwide in every market. He said the company has relationships with 15 of the 100 largest U.S. health systems and that some customer relationships have lasted more than 15 years.
AI and workflow integration
RadNet plans to combine ONRAD’s physician network and hospital customer relationships with the company’s DeepHealth digital health platform, including artificial intelligence, cloud-based imaging workflow, reporting and remote scanning tools.
Berger said ONRAD has already been using DeepHealth’s viewer and PACS-related tools for about a year, while the two companies have worked together for roughly 18 months. RadNet expects to introduce additional DeepHealth capabilities at ONRAD throughout 2027, including clinical AI, a single-point orchestration platform, reporting tools and a cloud-native environment.
The company described an “intelligent and intentional radiology workflow” in which AI-enabled systems help with case assignment, triage by acuity, visualization of findings and draft report generation. Berger said radiologists would remain responsible for reviewing, editing and signing reports.
Greg Sorensen, RadNet’s chief strategy officer, said the company views AI as a way to help radiologists work more efficiently and produce higher-quality reports rather than replace them. He said the combined platform could also improve follow-up on unexpected imaging findings by pairing reports with medical-reference tools and clinical-navigation capabilities.
“We can boost the quality,” Sorensen said. “We can now bring that in a more efficient way to the inpatient setting through Dave’s team, through more hospital partners through Dave’s team.”
Financial profile and potential synergies
Mark Stolper, RadNet’s executive vice president and chief financial officer, described ONRAD as a capital-light business with adjusted EBITDA margins above 30%. He said ONRAD has been spending about $1 million annually on capital expenditures and that its projected $60 million to $65 million of adjusted EBITDA is “essentially all pre-tax net income” because of the business’s limited depreciation and capital requirements.
Engert said ONRAD’s margin profile has been supported by automation of image intake, workflow assignment and report delivery. He said that once an imaging study is transmitted from a hospital, ONRAD’s systems can route it to the appropriate radiologist and return the final report to the customer’s electronic medical record with limited manual involvement.
RadNet said the first-year EBITDA projection does not depend on revenue synergies from the acquisition. Stolper said the estimate reflects what ONRAD could achieve as a standalone business, while RadNet intends to pursue additional opportunities to cross-sell digital health products to ONRAD’s hospital customers and offer professional radiology services to RadNet’s existing health-system partners.
Berger said there is currently limited overlap between the companies’ customers. RadNet operates in 11 states, while ONRAD operates in 21 states, he said, creating opportunities to broaden the combined company’s footprint.
Stolper said RadNet expected net leverage to be about 1.6 times to 1.7 times before the transaction, with the acquisition adding roughly 0.4 times of leverage in the short term. He said the company generally intends to keep leverage below 2.5 times and below 3 times absent an unusually transformative opportunity.
Separately, Stolper said RadNet’s core business trends remained strong heading into its third-quarter report, citing continued advanced-modality volume growth and improving integration of prior acquisitions in Southwest Florida and Indiana.
About RadNet (NASDAQ:RDNT)
RadNet, Inc (NASDAQ: RDNT) is an outpatient diagnostic imaging company that operates imaging centers and provides related healthcare services. Its facilities offer diagnostic radiology and imaging procedures used to help detect, diagnose, and monitor medical conditions.
The company’s services generally include magnetic resonance imaging (MRI), computed tomography (CT), positron emission tomography (PET), mammography, ultrasound, X-ray, and other imaging procedures. RadNet also provides image-guided and interventional radiology services in selected markets, along with digital imaging, radiology, and information-technology solutions.
Founded in 1981, RadNet serves patients, physicians, hospitals, and other healthcare organizations through a network of outpatient imaging centers primarily located in the United States, including markets in California, New York, New Jersey, Maryland, and Delaware.
