Minnesota’s public medical companies not named Medtronic Inc. are continuing their disappearing act, with Virtual Radiologic Corp. (NASDAQ: VRAD) heading private after a $294 million acquisition closes.
The radiology outsourcing firm, which went public in a $68 million IPO three years ago, has agreed to be purchased by Rhode Island-based private equity firm Providence Equity Partners, according to (pdf) a statement from the two companies.
Under the agreement, Providence would acquire all outstanding common shares of Virtual Radiologic for $17.25 a share, a 42 percent premium over Friday’s close. The deal is expected to close in the third quarter, at which time Virtual Radiologic would go private.
Virtual Radiologic co-founder and Chief Medical Officer Dr. Eduard Michel, who owns 6 percent of the company’s outstanding common shares, and private equity firm Generation Partners, which owns 25.3 percent, will vote in favor of the deal, according to the statement.
The deal may not bring smiles to Minnesota’s medical technology community the way it will for Michel and Generation Partners. After ATS Medical Inc. agreed to be acquired by Medtronic in April, the deal for Virtual Radiologic marks the second public med tech company the state has lost in as many months. And others could follow, with Synovis Life Technologies Inc. (NASDAQ: SYNO), Cardiovascular Systems Inc. (NASDAQ: CSII) and Vital Images Inc. (NASDAQ: VTAL) looming as potential buyout candidates.
Virtual Radiologic sells teleradiology services and software that remotely connects hospitals and clinics around the country to radiologists who analyze and interpret MRI and CT scans. The company has been growing rapidly, to $121 million in revenue in 2009 compared from $86 million in 2007.
Since 1989, Providence Equity says it’s invested in more than 100 companies, such as Hulu and Kerasotes Theatres, but few firms in the health space. The company manages more than $22 million in equity capital.
By Brandon Glenn MedCity News
Brandon Glenn is the Ohio bureau chief for MedCity News.More posts by Author
Frank, Thanks very much for the comment. I agree with you that a local company being acquired isn't a universally bad thing. However, one could argue that losing public companies ultimately hurts a region's visibility. To take this to the extreme, would Minnesota have such a high-profile device community if it had two public companies instead of 10, for example? Of course, job loss is always a concern regarding acquisitions, though again that doesn't appear to be much of an issue in this particular case.
Brandon, I don't agree with the line of reasoning that Minnesota based public medtech companies being acquired is a bad thing becuase we have fewer public companies. These exits will put wealth into the hands of entreprenuers, which they are likely to invest in other companies or start their own next venture. That process of new company formation and exit has created hundreds of small and large medical device companies in Minnesota, and to a lesser extent the biotech and pharma community that is in Minnesota and the emerging green chemistry community. I would argue that the increase in M&A activity is good for the community - more capital will be available to start the next round of companies.