A Medical Device Daily
RadNet (Los Angeles), a provider of diagnostic imaging services through a network of fully-owned and operated outpatient imaging centers, reported that it entered into an agreement with a lender who had just foreclosed upon a chain of 20 imaging centers to assume the management of those imaging centers.
RadNet’s subsidiary, RadNet Managed Imaging Services (RMIS), will provide management and operational services to those centers and will make available similar business services to other imaging center operators in the future.
RMIS has entered into an agreement to provide administrative and management services to a national chain of 20 imaging centers formally known as Nydic Open MRI of America (Montvale, New Jersey). The chain of MRI centers operates in 11 states and produces net revenue of about $30 million per annum. RadNet has not purchased these centers. Instead, it will provide services through RMIS in return for management fees. The services which RMIS will provide include billing and collection, transcription, medical coding, equipment management, medical supplies purchasing, acquisition and sale advisory work and overall strategic management.
As remuneration for RMIS’ services to the 20 imaging centers, RMIS will receive a monthly management fee and a percentage of the centers’ net revenue. RMIS is eligible for additional fees with respect to certain performance initiatives.
“Since the onset of the Deficit Reduction Act, we have been approached by lenders, equipment manufacturers, equipment vendor financing arms and other operators to acquire their underperforming centers. Many of these opportunities have been outside of our core markets, and have not fit within our disciplined acquisition and operational strategy of geographic concentration,” said Dr. Howard Berger, CEO/chairman of RadNet. “However, with RadNet Managed Imaging Services, we are now positioned to provide our experience, management talent and substantial infrastructure to help these parties improve and optimize their imaging assets. RMIS allows RadNet to benefit from selling valuable business services to operators in situations where acquiring the operations does not fit with our strategy.”
Management services that RMIS will provide include billing and collecting and/or revenue cycle management, transcription, medical coding, site-level operational assistance, equipment asset management, acquisition and sale advisory and supplies purchasing. RMIS will directly provide these services, and from time-to-time, utilize third-party industry relationships under its oversight to assist it in providing some of these services.
RadNet operates in six states, including California, Maryland, New York, Florida, Kansas and Colorado. It offers the full spectrum of diagnostic imaging exams, including PET/CT, MRI, CT, nuclear medicine, mammography, ultrasound and X-ray, as well as numerous other procedures.
HEI (Victoria, Minnesota) reported that it has entered into an agreement to sell substantially all of the assets of its radio frequency identification (RFID) division to Smartrac Technology US (Chanhassen, Minnesota), a wholly-owned subsidiary of Smartrac (Amsterdam, the Netherlands).
The transaction is structured as a sale of substantially all the assets of the RFID division, including inventory, receivables, customer contracts and customer lists, and the assumption of substantially all of the liabilities. The purchase price to be paid at closing is $3 million cash and the parties said they expected to close the transaction prior to the end of HEI’s 2007 fiscal year end, which occurred on Sept. 1.
RFID technology is used in a variety of industries, from medical to agriculture to warehousing. The technology often includes tiny chips that emit radio signals so that products can be easily tracked or identified. HEI’s RFID business includes a leased, 15,173-square-foot facility in Chanhassen, which Smartrac will acquire in the deal. Smartrac will also assume about 25 employees from HEI
HEI CEO Mark Thomas said that the RFID business, which did about $3.5 million in annual revenue, had always been relatively independent of HEI and as such was easy to carve out for a sale. Smartrac, he said, had been looking to establish a stronger presence in the U.S.
As a result of this transaction, HEI said it expects to recognize a gain from the sale of assets in the 4Q07 of about $1.5 million, prior to any employee obligations, severance and other transaction-related costs. It said it intends to use the sale proceeds to pay down existing debt obligations.
HEI makes microelectronics, subsystems, systems, connectivity and software solutions for OEMs engaged for the medical equipment and medical device, hearing, communications and industrial markets.
In other dealmaking news:
Flextronics International (Singapore) said it acquired device maker Avail Medical Products (Fort Worth, Texas) to expand its medical reach. Terms of the deal, expected to close before the end of the calendar year, were not disclosed.
Flextronics, a global provider of electronics manufacturing services to equipment makers, said it expects the deal to be neutral to the earnings-per-share guidance for all periods the company previously provided.
Early last week, European Union antitrust regulators approved Flextronics’ $3.6 billion acquisition of Solectron (Milpitas, California) that was first disclosed in June (Medical Device Daily, June 5, 2007).
Flextronics said that the pending Solectron deal and Avail purchase will “significantly broaden Flextronics Medical segment’s offerings, and establish Flextronics as a leading supplier and partner for the medical industry.”
Privately held Avail focuses on the outsourced development and manufacture of sterile and single-use medical devices for medical device makers. The company expects 2007 sales of about $250 million.
Cogdell Spencer (Charlotte, North Carolina) reported that it has acquired Summit Professional Plaza I and II (Brunswick, Georgia) for about $24.8 million in cash. The two-building complex totals 97,472 square feet and is 98% leased.
This acquisition marks both a new market and new client relationship for Cogdell Spencer. Southeast Georgia Health System, a 356-bed not-for-profit healthcare system, is the anchor tenant and currently leases 38% of the complex. Southeast
Southeast Georgia Health System is the only hospital in Glynn County and the primary healthcare provider for the seven surrounding southeast Georgia counties. This market includes the resort communities of St. Simons Island and Sea Island. The healthcare system’s recent expansions include a new outpatient care center that opened in 2006.
This acquisition further expands Cogdell Spencer’s portfolio in the growing coastal regions of Georgia and the Carolinas, the company said.
Cogdell Spencer is a fully-integrated, self-administered and self managed real estate investment trust that invests in specialty office buildings for the medical profession, including medical offices, ambulatory surgery and diagnostic centers.