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RadNet enters software business with eRad buy

by Brendon Nafziger, DOTmed News Associate Editor | September 13, 2010
Outpatient imaging chain RadNet Inc. is moving into the software business with the acquisition of eRad Inc.'s parent company.

The Los Angeles-based radiology center group said Monday it was buying Image Medical Corporation for $10.75 million dollars in a combination of cash and promissory notes. The deal is expected to close by the end of the month, and will add around $5 million in revenue to the company, the group said.

RadNet, which runs 191 radiology centers nationwide, said the acquisition could ultimately save the company more than $20 million over the next decade by "eliminating the licensing, annual support and maintenance fees" the company would otherwise have to pay.

RadNet's stock jumped almost 9 percent to reach $2.60 a share in recent trading.

"Up to this point, our revenue has been earned exclusively through our owned and operated facilities," RadNet's president and CEO Dr. Howard G. Berger said in a statement. "With today's announcement, we have positioned ourselves to sell products and services to the over 6,000 freestanding imaging centers and the 10,000 imaging operations within community hospitals across the U.S. that we do not own."

Eleven-year-old eRad, based in Greenville, S.C., develops PACS and workflow software, which are used in over 250 hospitals, teleradiology centers and doctor's offices, according to RadNet.

RadNet said eRad and a newly hired team of software developers would form a Radiology Information Technology division, under Chief Information Officer Ranjan Jayanathan. The new team would help develop workflow products to complement eRad's other software, RadNet said.