Eight big M&A stories in the parts and service industry

August 28, 2022
Consolidation is reshaping the entire healthcare industry, but the trend is especially prominent among parts and service providers. Here we run through some of the biggest M&A stories of the past several months, that are expanding the footprint of equipment maintenance teams.

MXR Imaging Inc. acquires Mega Tech Inc.
MXR Imaging Inc. announced in June it has completed the acquisition of Mega Tech Inc.

Mega Tech, headquartered in Paterson, New Jersey, has been a leading provider of CT and MR equipment sales and maintenance service for decades.

Established in 1995 and known for their personal touch and strength of their technical background, Mega Tech has provided high-quality medical imaging services to its customers in all sectors of healthcare.

MXR Imaging executives stated that this acquisition will expand the company’s footprint in the northeast and further strengthen its service support organization.

“We are very excited about the technical imaging expertise and talented people that are becoming part of the MXR Imaging organization,” noted Bernard Amato, CFO of MXR Imaging.

MXR Imaging Inc. is the largest independent distributor of imaging sales and service in the U.S. It also offers service support, legacy equipment assistance, equipment relocation, mobile rentals, parts, training, and radiology consumable/durable goods to the healthcare market. MXR's imaging portfolio includes CT, PET/CT, MR, ultrasound, general radiology imaging equipment, and PACS.

Peak Rock acquires 626 Holdings
An affiliate of private investment firm Peak Rock Capital announced in June it had acquired third-party imaging services company 626 Holdings.

Founded in Florida in 2014, 626 is ISO 13485:2016 certified and services all types of scanners developed by various manufacturers for outpatient imaging centers, hospitals and other independent service organizations.

Its sale will further Peak Rock’s stake in the healthcare space, while allowing 626 to build upon its sales and technology initiatives, expand its footprint and continue to make strategic acquisitions to boost growth, said Spencer Moore, managing director of Peak Rock, in a statement. "626 represents a tremendous opportunity to partner with the founders and management of a leading services and maintenance business in the imaging sector, helping to reduce healthcare costs and support high-quality patient care.”

Among 626’s past acquisitions is Walsh Imaging, which services all imaging modalities and is an OEM dealer for Konica Minolta, Del Medical and Fujifilm. It provides service and equipment to nearly 3,000 providers and was sold to 626 in 2017.

626 also acquired depot and on-site repair service provider ISS in 2019; became a parts supplier in 2020 when it purchased PhiGEM; and bought Innovatus Imaging’s CR and DR business the same year.

In December 2021, it added California Radiographics, which expanded its presence out west. CRI services X-ray equipment from major manufacturers for hospitals, medical imaging clinics, chiropractors, orthopedists and veterinarians in most of California.

Other companies it owns are third-party, multi-OEM mammography provider Digitec; and Independence Cryogenic Engineering, which specializes in compressors, cold heads, lines and helium in support of its growing customer base.

"I'm excited to add Peak Rock as a partner, as their resources and expertise will support us in further expanding our imaging services platform,” said 626 co-founder and chief executive officer Phil Revien.

No financial details were disclosed.

Christie Innomed acquires U.S. company Comp-Ray
Christie Innomed, one of Canada's largest independent healthcare companies, announce in June that it is entering the U.S. market with the acquisition of medical imaging hardware and software solutions company, Comp-Ray, which offers multi-vendor sales and service solutions throughout the southwestern U.S. from its headquarters in Arizona.

This acquisition was meant to continue Christie Innomed's goal of improving health and safety in patient care by becoming the largest independent healthcare company in their industry. The combination of these two leaders will provide their customers and suppliers with access to a broader portfolio of solutions, from a common interest in prioritizing respect, honesty, and integrity in business.

For more than 40 years, Comp-Ray has offered a complete range of multi-vendor equipment solutions in the medical imaging sector with MR, CT, angiography and PACS solutions.

"This new acquisition will allow us to continue to develop our wide range of solutions, optimize our supply chain and always offer more to our customers and partners," said Martin Roy, president and CEO of Christie Innomed, in a statement at the time. "The addition of these additional expertise and teams will contribute to our "Mission and Vision" of excellence which leads us to imagine more by providing access to world-class innovations and technologies for the benefit of patients," he continued.

Founded in 1954, Christie Innomed has over 200 dedicated specialists serving more than 1,500 hospitals and clinics, supported by eight offices and business locations across Canada.

Avista Capital Partners to buy Probo Medical for $450 million: report
New-York-based Avista Capital Partners announced a deal in February to take a majority stake in Probo Medical from Varsity Healthcare Partners. No financial details or deal terms were disclosed, but sources advised Axios the price could be in the $450 million range.

Illinois-based Probo, founded in 2014 as an ultrasound equipment refurbisher, has grown during its time with Varsity. It now provides ultrasound probe sales and repair services, and had over $30 million in EBITDA in 2021 — up from $8 million in 2018 — according to Axios.

“Probo is well-positioned to accelerate growth as favorable sector trends continue, particularly growing demand for newer, high-quality refurbished equipment,” Avista Partner Sriram Venkataraman said in a statement.

One of the major drivers of such demand growth is the budget pressures on healthcare facilities during the pandemic, necessitating cost-cutting wherever possible, which tends to favor the refurbished medical equipment market.

Vertically integrated Probo now has 14 facilities in the U.S. and Europe, from which it serves customer needs including: equipment and part sales, rentals, repair, and equipment installation and de-installation.

The company prospered during its three years with Varsity Healthcare Partners. The relationship will continue, too, said David Alpern, founding partner at Varsity Healthcare Partners, who stated that his firm looks forward “to continuing our partnership with Probo through a commitment from our third fund. We are confident that Probo will continue to thrive with Avista as their partner, and we look forward to supporting them on this next chapter of their growth story.”

Avista has nearly $8 billion invested in over 40 healthcare businesses worldwide. Varsity is a lower middle-market private equity investor that focuses on partnering with founders, entrepreneurs and management teams.

Probo will benefit from Avista's financial — and strategic — support, noted Probo CEO Michael Asmer, stressing that there is “a robust pipeline of acquisition opportunities in the U.S. and Europe,” to further aid “our impressive growth trajectory.”

An indication of its strategy surfaced earlier this month when Probo grew its North American footprint with its REMETRONIX buy. REMETRONIX services CT, MR, PET/CT, X-ray and proton therapy equipment, and has multiple offices in the U.S. and Canada, and one in the U.K.

This was just one of a number of recent acquisitions by Probo.

Last year, it acquired ultrasound equipment service provider, Tenvision, which gave that firm's customers access to the world’s largest inventory of new and used diagnostic imaging equipment.

Also in 2021, the company acquired Florida-based SonoDepot, a third-party ultrasound service, maintenance, and repair organization.

Earlier in the year, Probo bought U.K.-based Mount International United Services, which offers third-party services, repairs and maintenance for medical imaging equipment in Great Britain, including ultrasound, CT, MR and X-ray.

In 2019 it acquired Trisonics, which specialized in the sale of ultrasound devices, including the resale of 2D, 3D/4D and transesophageal ultrasound probes.

In 2018, Probo merged with MedCorp. That deal made the combined company the industry's largest ultrasound equipment reseller at the time.

DirectMed acquires LBN Medical, expands internationally
DirectMed Parts & Services, an independent medical equipment parts supplier specializing in MR and CT, is expanded its offerings overseas through the acquisition of LBN Medical in February.

Based in Denmark, LBN resells complete aftermarket diagnostic imaging systems and parts from over 15 manufacturers, including Canon, GE, Hologic, Siemens and Philips. It has over 50 employees in Denmark and Egypt.

Under DirectMed, LBN will have access to greater diversity of parts and technical support, while supporting DirectMed's ability to extend the life of medical imaging equipment to help providers improve access, reduce waste and lower healthcare costs.

"Step one is for DirectMed to begin supplying LBN Medical’s Danish facility with MR and CT parts to support Siemens, Philips, GE and Toshiba systems. Our respective operational teams have already begun the planning and execution process to support LBN’s global customer-base with our critical parts. Step two is for LBN to help us build out our system sales capabilities here in the U.S. across ultrasound, mammography, X-Ray, MR and CT," Tanner LoRusso, VP of sales at DirectMed, told HCB News.

LBN’s distribution team speaks 21 different languages, has negotiated deals in 60 countries and has experts who specialize in servicing seven modalities. It is expected to bring system sales to DirectMed's customer base. In exchange LBN employees will be able to stock and access over 10,000 unique part numbers for support.

DirectMed has over 60,000 parts in stock and repairs, supports and sells equipment from GE, Siemens and Philips to healthcare networks, imaging centers and ISOs worldwide. The company gained ISO 13485:2016 certification in 2018 for MR and CT parts and service.

A year later, it acquired Medical Systems Technologies, LLC, a specialist in MR and CT component level repair and testing. The company provided subassemblies, circuit boards and subsystems for medical imaging equipment. The deal gave DirectMed additional key component repair capabilities and quality metrics.

“For MR, CT and PET/CT systems made by GE, Siemens, Philips and Toshiba, our company now has the ability to perform component-level repairs for these additional high-failure parts: RF and gradient amplifiers, power supplies and support electronics,” said LoRusso at the time.

DirectMed is a portfolio company of NMS Capital, which acquires and grows companies with particular concentrations in business and healthcare services. “Since we partnered with the DirectMed team in June 2021, one of our primary areas of focus has been expanding our geographic coverage,” said David Peterson, managing director at NMS. “Providers around the world are looking for cost-effective solutions to acquire and maintain equipment as they continue to grow their practice. The combination of DirectMed and LBN supports that exact need in the marketplace.”

NMS provided financial and operational support for the trans-Atlantic acquisition.

Financial details were not disclosed.

Sentinel Capital acquires TTG Imaging Solutions
In December, private equity firm Sentinel Capital acquired TTG Imaging Solutions, provider of nuclear medicine and molecular imaging solutions for cardiology and oncology patients.

As part of the deal, Sentinel will provide capital to help TTG expand its business. In exchange, ownership of TTG’s maintenance and repair services, clinical staffing and radiopharmaceuticals will fall under Sentinel, along with three equipment repair centers and three radiopharmacies operated by TTG for providers across 46 states.

“TTG, since March of 2019, has been executing on a strategy of bringing together organizations involved in all aspects of diagnostic and molecular imaging who share a common thread of customer centric service. Additionally, we have been effectively expanding through strategic hiring in certain regions of the country. Sentinel agrees with the vision that our management team has been executing on and has the financial capital and expertise to support us in that journey,” Matt Mastarone, president and CEO of TTG, told HCB News.

With Sentinel’s financial backing, TTG will continue to expand its footprint and reach among various modalities in the markets it serves through both organic and inorganic growth. It says the acquisition will not affect its employees or customers.

TTG offers solutions for SPECT, SPECT/CT, PET, CT and PET/CT. Among its radiopharmaceutical solutions are cardiac imaging agents, custom-compounded iodine therapy and a complete line of products used in general imaging. For cardiac imaging, it offers turnkey nuclear, echo and vascular testing programs that provide an outsourced model to aid physician practices and health systems.

TTG also provides upgrades for nuclear medicine and molecular imaging equipment, equipment relocations, on-site training and continuous clinical applications support, and third-party sales, repair, refurbishment and installation services for medical imaging devices.

Sentinel, meanwhile, has extensive experience in third-party equipment sales and service in a variety of end-markets, both in and outside of healthcare. The company has invested in a number of third-party companies, including New Era Technology for IT solutions, Mobile Communications America for networked communications, and UBEO for document management.

Since its founding 2004, TTG has acquired nine companies that have expanded its geographic coverage and added on new technical capabilities. This includes Southwestern Imaging Systems & Services (SWISS), a medical imaging equipment, parts, and service company that specializes in gamma camera and PET equipment sales, service, and turnkey services. It acquired the company, based in Houston, in November 2020.

It also recently acquired Medical Imaging Technologies in Ohio, which brought to it a robust customer base in the Midwest, along with a strong group of field service engineers. As part of this deal, TTG also shook up its executive leadership to further drive growth in the company.

"The TTG team has developed an impressive growth playbook, and we are thrilled to provide them the capital and support to significantly expand the business. We look forward to working with TTG's talented team as they enter their next chapter of growth,” said Paul Murphy, a Sentinel partner, in a statement.

Financial details for the deal were not disclosed.

Agiliti to acquire Sizewise Rentals for $230 million
Healthcare service provider Agiliti announced plans to acquire Sizewise Rentals, a manufacturer of specialty hospital beds, for $230 million in an all-cash, stock purchase transaction last September.

The addition of Sizewise, which also manufactures therapeutic surfaces and mobility equipment for enhanced healing and better caregiver satisfaction, is expected to help Agiliti address a number of needs in the growing specialty equipment services market with its products and operational capabilities.

The deal is set to be completed early in the fourth quarter of 2021 and will be financed through a combination of cash and debt. Agiliti and Sizewise expect to make up to $5 million in annual cost synergies in the first year alone, and rake in $15 million within three years. News of the acquisition sent Agiliti shares up Tuesday, according to TheStreet.

“The combination builds on our existing geographic footprint and adds relevant scale to our Equipment Solutions service line, while simultaneously expanding our capabilities to bring differentiated products and services to market for our customers,” said Tom Leonard, CEO of Agiliti, in a statement.

Sizewise is expected to help scale Agiliti’s infrastructure and strengthen its capabilities in the supply chain to provide greater control over R&D, manufacturing and logistics for a vital and differentiated product category. It also will help Agiliti meet new demands for bariatric patients and those at risk of skin and fall injury, while helping to ensure high utilization of devices by enhancing Agiliti’s end-to-end service model.

Sizewise works with hospital discharge planners to make sure equipment meets all requirements for moving patients to post-acute care. In addition to designing bed frames, it uses tech fabrics and designs to create comfortable support surfaces for enhanced healing, as well as designing safe patient handling and mobility equipment such as sit-to-stand chairs for positioning patients appropriately.

Agiliti, meanwhile, helps in-house teams repair and perform preventive maintenance to ensure bed availability. Earlier this year, the company launched a $500 million IPO on the New York Stock Exchange that is poised to rack up $2.6 billion in market value. It also acquired, around the same time, Northfield Medical, a nationwide provider of surgical equipment repair services, for $475 million to enhance repairs for endoscopes and surgical instruments.

Together, Agiliti and Sizewise plan to optimize their complementary distributed operations networks to increase local market presence and boost one another’s operational workflow. These networks include facilities, vehicles, staff, products and operating systems.

Sizewise provides solutions for more than 3,000 customers in the acute and post-acute care markets for bariatric, geriatric, pediatric and standard patient population needs. It raked in $155 million in revenue for 12 months, it reported in June 2020, and had an Adjusted EBITDA of $30 million. It is made up of 65 local, in-market service branches and has four manufacturing centers in Kansas and California.

“They do not have a manufacturing presence as we do, and they will now have access to our products and innovation. We view this as a complementary transaction that offers potential for future growth,” said Sizewise CEO Brain Frickey. He adds that more news on the combination of both companies is expected to follow the completion of the deal.

Headquartered in Minneapolis, Agiliti serves more than 7,000 national, regional and local acute care and alternate site providers across the U.S.

The deal has been approved by both companies’ boards of directors and is subject to customary closing conditions.

Cool Pair Plus to join Avante's family of companies
It was back in March 2021 when Cool Pair Plus, which sells, services, refurbishes and repairs MR cryogenic equipment, announced it would be joining the Avante Health Solutions family of companies.

“We anticipate that Cool Pair Plus will immediately provide accelerated growth within the Avante Diagnostic Imaging platform,” said Avante in a statement.

Avante’s diagnostic imaging services include on-site repair, discounted OEM-compatible parts, equipment upgrades, remote diagnostic tools, equipment planning and logistics, a technical hotline and mobile storage. The company has businesses specializing in ultrasound, surgical equipment, rental services, patient monitoring, oncology and diagnostic imaging.

In 2018 the company acquired refurbisher Ultra Solutions to expand its capabilities and footprint in the ultrasound market, as well as its inventory of parts, probes and ultrasound systems. The same year, it partnered with Equipment Maintenance Solutions (EMS) to expand its footprint into MR and CT service, sales, parts and rentals.

Cool Pair Plus offers exchange and repair services for MR coldheads, compressors, adsorbers, and helium flex lines for major manufacturers, and provides on-site MR magnetic service, including turnkey installations for these solutions. It also has a history of consolidation, having acquired the Tripwire MR monitoring product line from Simplexable in 2018. It described it at the time as "an important addition" to its existing da Vinci Remote Magnet Monitoring System.

Coor Pair Plus will continue to operate at its current site in Algonquin, Illinois. It is ISO 13485:2016 certified like other Avante companies.