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Virtual Radiologic Corp. sold for $294M, will go private

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 […]

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.

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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.