Teleradiology specialist Medica Group PLC (LON:MGP) is expanding into the fast-growing clinical trials market with the acquisition of RadMD, a US-based imaging contract research organisation (iCRO), in a deal worth up to £15.6mln.
The initial cash element is being funded by a £16mln placing of new shares, with certain directors and senior managers chipping in £556,000 of their own money.
At the current run rate annual run rate, RadMD’s underlying earnings (EBITDA) are in the region of £1.1mln on revenues of £7.2mln.
The deal is expected to be earnings enhancing in the first full year. Chief executive Stuart Quin said it “accelerates” the company’s ambitions in the field of clinical trials.
“This acquisition provides entry into a new and exciting market for Medica with opportunities for growth and penetration of new geographies and customers,” Quin told investors.
“Whilst RadMD serves different customers to Medica, the need to provide a highly specialised network of radiologists reading cases remotely, using excellent systems and supported by high-quality clinical governance is akin to our existing core strengths and expertise.”
Medica is taking full advantage of expansion opportunities. Last month it inked a joint-venture with MedX, which gives it access to the Australia and New Zealand teleradiology market, as well as providing increased reporting capacity. Last November it bought Global Diagnostics Ireland for £14.5mln.
This latest deal provides access to the growing, US$1bn a year marketplace for imaging in clinical trials. It also ensures Medica isn’t starting from scratch in this arena.
“RadMD is a high-quality business strongly rooted in a passion for radiology and, as a result, many clients now trust the RadMD team to design and deliver important clinical trials to the highest quality standards,” said Quin.
In the same statement, the group re-confirmed its revenue and earnings guidance. It ended last year with £13.9mln of cash and £4mln of debt.
Encouragingly it added that activity from both NightHawk and Elective businesses has “continued to grow month-on-month so far in 2021”.
The former offers around the clock emergency teleradiology reporting, while the latter supports the diagnosis and management of a wide range of ailments from suspected cancers to joint replacements and slipped discs. It works with over 100 NHS trust hospitals in the UK.
The Royal College of Radiologists is predicting a shortage of up to 3,300 radiologists in the UK by 2024.
Medica is in a position to help pick up this slack as it runs a team of specially trained doctors that can remotely access and assess MRI and CT scans, as well as x-rays.