Centric Health to grab diagnostic imaging, telerad practices

Twitter icon
Facebook icon
LinkedIn icon
e-mail icon
Google icon
Centric Health has entered into an agreement to acquire Medical Imaging Centres and certain business assets of Rads 24/7 Teleradiology Consultants for up to $36.2 million.

Medical Imaging Centres is a provider of diagnostic imaging and interpretation services in Ontario. Services currently and expected to be provided include digital x-ray, ultrasound, mammography, bone densitometry, nuclear medicine, PET/CT and other related imaging services at 15 locations throughout Ontario.

Centric Health also will acquire seven additional diagnostic imaging licenses in Ontario, which are anticipated to become operational within the next 12 months.

The total consideration to be paid on closing for the Medical Imaging Centres is comprised of $15 million in cash and the issuance of up to $24.2 million in Centric Health common stock at a price equal to the greater of $2.50 or 90 percent of the five-day volume weighted average share price immediately prior to the closing date. The number of performance shares to be released will be determined via formula and based on the business attaining EBITDA of $5.6 million for the year ended Oct. 31, 2012. In addition, an outperformance payment of up to a maximum of $7.6 million may be payable in cash or common shares, at the election of the purchaser, subject to achieving the 2012 projected EBITDA and achieving a minimum of $6.16 million of EBITDA for the year ended Oct. 31, 2013. Medical Imaging Centres EBITDA margins are consistent with those in the imaging industry ranging between 20 to 25 percent.
 
The total consideration to be paid on closing for the diagnostic imaging licenses is comprised of $6 million in cash and the issuance of up to $12 million in Centric Health common shares at the issue price. The shares are scheduled to be issued as the licenses become operational.  The two tranches of shares, totaling $5 million and $7 million, will be issued at Oct. 31, 2013, and Oct. 31, 2014, respectively or earlier in each case if those licenses achieve defined annual revenue targets.

These shares will be issued and delivered to, and held by, an independent escrow agent upon successful closing of the transaction, and will be released to the vendors in tranches upon the achievement of the EBITDA and revenue targets.

These transactions are subject to further satisfactory due diligence, definitive documentation, regulatory approvals and customary closing conditions. Until all the closing conditions are satisfied or waived, there can be no assurances that these transactions will be completed. If all closing conditions are satisfied, the closing is expected to occur in October, according to Toronto-based Centric Health.